Cover

Integrating Productivity and Quality

title:
Management Industrial Engineering ; V. 19
author: Edosomwan, Johnson Aimie.
publisher: CRC Press
isbn10 | asin: 0824795849
print isbn13: 9780824795849
ebook isbn13: 9780585376448
language: English
Industrial productivity--Management,
subject Quality assurance--Management, Quality of
products--Management.
publication date: 1995
lcc: HD56.E28 1995eb
ddc: 658.5
Industrial productivity--Management,
subject: Quality assurance--Management, Quality of
products--Management.
Page a

Integrating Productivity and Quality

Management
Page b

INDUSTRIAL ENGINEERING

A Series of Reference Books and Textbooks

1. Optimization Algorithms for Networks and Graphs, Edward

Minieka
2. Operations Research Support Methodology, edited by Albert G.
Holzman
3. MOST Work Measurement Systems, Kjell B. Zandin
4. Optimization of Systems Reliability, Frank A. Tillman, Ching-Lai
Hwang, and Way Kuo
5. Managing Work-In-Process Inventory, Kenneth Kivenko
6. Mathematical Programming for Operations Researchers and
Computer Scientists, edited by Albert G. Holzman
7. Practical Quality Management in the Chemical Process Industry,
Morton E. Bader
8. Quality Assurance in Research and Development, George W.
Roberts
9. Computer-Aided Facilities Planning, H. Lee Hales
10. Quality Control, Reliability, and Engineering Design, Balbir S.
Dhillon
11. Engineering Maintenance Management, Benjamin W. Niebel
12. Manufacturing Planning: Key to Improving Industrial Productivity,
Kelvin F. Cross
13. Microcomputer-Aided Maintenance Management, Kishan Bagadia
14. Integrating Productivity and Quality Management, Johnson Aimie
Edosomwan
15. Materials Handling, Robert M. Eastman
16. In-Process Quality Control for Manufacturing, William E. Barkman
17. MOST Work Measurement Systems: Second Edition, Revised and
Expanded, Kjell B. Zandin
18. Engineering Maintenance Management: Second Edition, Revised
and Expanded, Benjamin W. Niebel
19. Integrating Productivity and Quality Management: Second Edition,
Revised and Expanded, Johnson Aimie Edosomwan
Additional Volumes in Preparation
Page i

Integrating Productivity and Quality Management

Second Edition, Revised and Expanded

Johnson Aimie Edosomwan

Continuous Improvement Company, and

Johnson & Johnson Associates, Inc.
Fairfax, Virginia
Page ii

Library of Congress Cataloging-in-Publication Data

Edosomwan, Johnson Aimie.
Integrating productivity and quality management / Johnson Aimie
Edosomwan. — 2nd ed., rev. and expanded.
p. cm. — (Industrial engineering ; 19)
Includes bibliographical references and index.
ISBN 0-8247-9584-9
1. Industrial productivity—Management. 2. Quality assurance—
Management. 3. Quality of products—Management. I. Title.
II. Series: Industrial engineering ; v. 19.
HD56.E28 1995
658.5—dc20 94-39919
CIP

The publisher offers discounts on this book when ordered in bulk

quantities. For more information, write to Special Sales/Professional
Marketing at the address below.

This book is printed on acid-free paper.

Copyright © 1995 by MARCEL DEKKER, INC. All Rights Reserved.

Neither this book nor any part may be reproduced or transmitted in any
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MARCEL DEKKER, INC.

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Current printing (last digit):

10 9 8 7 6 5 4 3 2 1

PRINTED IN THE UNITED STATES OF AMERICA

Page iii

Preface

Since the publication of the first edition of this book, a massive evolution
has begun in the global marketplace. Many organizations have
responded to the competitive environment of the 1980’s with increased
emphasis on quality and productivity improvement. Increasingly,
companies, organizations and government agencies in the 1990’s are
facing inflation, global competition, budget cuts, and unemployment. Both
“profit” and “nonprofit” organizations have a growing need to reduce
expenses and generate acceptable levels of revenue in order to stay
fiscally sound. In the years ahead, significantly more organizations and
individuals will focus on the concepts of Total Quality Management:
productivity improvement, employee empowerment, and self-directed
work teams for continuous improvement.

Unfortunately, many of the books that are available today have treated
productivity and quality as unrelated subjects. These books have
provided methodologies and techniques for addressing productivity and
quality issues as separate dimensions. Some books emphasize the
quality dimension and others emphasize the productivity dimension.
Productivity and quality are interrelated and connected; they are
inseparable.

The primary objective of the first edition of this book was to close the gap
in the treatment of productivity and quality issues. With the second
edition, state-of-the-art concepts and techniques are explored as means
of successfully merging quality and productivity improvement efforts.
Within a validated conceptual framework, this book provides
methodologies, and techniques for managing productivity and quality in
companies and organizations. Detailed
Page iv

treatment of productivity and quality methodologies, principles, and

techniques is provided in the discussions of the three phases of the
productivity and quality management triangle (PQMT). The components
of PQMT are discussed: (1) measurement, control, and evaluation; (2)
planning and analysis; and (3) improvement and monitoring.

This book evolved out of research, teaching, consulting, and industrial

work in productivity and quality management, and out of seminars and
workshops conducted nationally and internationally. The case studies
derive from real-life experiences in both service and manufacturing
organizations. The book is intended to serve the practical needs of
practitioners, researchers, consultants, students, productivity managers,
quality improvement facilitators, and executives concerned with
productivity and quality improvement. Written in a simple manner, the
book can be used as both a class text and a handbook for reference
when addressing productivity and quality issues in companies and
organizations.

The book is organized into twelve chapters. Chapter 1 provides

definitions and concepts about the importance of productivity and quality
management. The productivity and quality management triangle is
presented. Various popular approaches and perspectives on quality
management are surveyed. The productivity and quality management
hierarchy (PQMH) is also introduced. Chapter 2 presents productivity and
quality management challenges, opportunities and scope. The rapidly
changing technology life cycle is discussed. The components of the
comprehensive productivity and quality management model (CPQMM)
are presented, followed by a detailed discussion of how to implement
TQM. Chapter 3 discusses the connection between productivity and
quality in the modern business environment. Case studies are presented
to illustrate the point that productivity and quality are interrelated.
Techniques are provided for understanding the basic cost of quality and
the cost of inspection per sample.

Chapter 4 discusses productivity management and measurement and

presents specific measurement models and techniques, both task-
oriented and technology-oriented. A step-by-step implementation
methodology for the models and measurement techniques is presented.
Case studies illustrate the application of techniques and reveal potential
problems. Chapter 5 discusses productivity and quality improvement
through the application of statistical process control concepts. Statistical
tools needed for data analysis are presented. A case study demonstrates
the application of statistical process control concepts in a group
technology production environment. Chapter 6 offers a conceptual
framework for productivity and quality planning. Specific planning
techniques are discussed under the four phases of the comprehensive
productivity planning cycle. A strategy for quality planning is offered. The
role of
Page v

technological forecasting in the planning process is presented.

Forecasting techniques are presented as tools in the overall planning
process.

Chapter 7 details four techniques for resolving quality problems with

emphasis on the quality error removal (QER) technique. The QER
discussion provides guidelines for work groups in resolving problems at
the source of production or service. Two case studies demonstrate the
application of the QER technique. Chapter 8 discusses productivity and
quality improvement strategies and techniques with an emphasis on the
production and service improvement technique (PASIT). A methodology
for implementing the just-in-time PASIT concept is advanced. Chapter 9
presents techniques for job simplification, motivation, and morale
improvement. The role of technology in productivity and quality
improvement is examined. Design rules that will guide systems designers
in developing better systems are provided. Chapter 10 discusses
guidelines for setting up and managing productivity and quality
improvement programs in organizations. A self-assessment checklist is
also provided along with a formalized approach for overcoming concerns.
Chapter 11 discusses the recent movement toward the customer-driven
organization. It includes customer-driven approaches to continuous
improvement in design, delivery and customer relations management.

Chapter 12 summarizes the key points of this book. Emphasis is placed

on the potential benefit from productivity and quality improvement.
Productivity and quality management are viewed as inseparable
components of an ongoing process that continuously seeks better
techniques and methods to eliminate waste, especially organizational
waste.
Johnson Aimie Edosomwan
Page vi
Page vii

Contents

Preface iii
1 Productivity and Quality Management Concepts 1
1.1 Productivity and Quality in the Modern Business Environment 1
1.2 Basic Definitions of Productivity and Quality 2
1.3 Formal Definition of Productivity and Quality Management 9
1.4 The Productivity and Quality Management Triangle 10
1.5 Benefits of Productivity and Quality Management 10
1.6 Top Management Role in Productivity and Quality 11
1.7 Causes of Productivity Decline in Companies 12
1.8 Strategies for Implementing Quality Programs 13
1.9 Effective System Management for Productivity and Quality
15
Improvement
1.10 Productivity and Quality Management Hierarchy 16
1.11 Perspectives on Quality 17
References 25
Page viii

2 Productivity and Total Quality Management Challenges, Opportunities,

27
and Scope of Activities
2.1 The Productivity and Quality Problem 27
2.2 Productivity and Quality Management Challenges 31
2.3 Components of the Comprehensive Productivity and Quality
39
Management (CPQM) Model
2.4 What Are Total Quality Management and Continuous Improvement of
39
Work Processes?
2.5 Why Focus on Total Quality Management and Continuous
42
Improvement Work Processes?
2.6 Who Is Involved in the Total Quality Management and Continuous
43
Improvement Work Effort?
2.7 Barriers and Benefits of Total Quality Management 43
2.8 How to Implement the Total Quality Management Concept and
47
Continuous Improvement Philosophy
2.9 Summary 63
References 64
3 The Productivity-Quality Connection 65
3.1 The Connection 65
3.2 Balancing Productivity and Quality Results 66
3.3 Case Study: A Printed Circuit Board Manufacturing Environment 68
3.4 Case Study: A Shoe Manufacturing Environment 73
3.5 Case Study: A Restaurant 74
3.6 Case Study: A Bank 75
3.7 Understanding the Basic Cost of Quality 76
3.8 Cost of Inspection per Sample 77
References 78
4 Productivity Measurement 79
4.1 Benefits of Productivity Measurement in Companies and Organizations 79
4.2 Difficulties in Measuring Productivity 80
4.3 The Most Commonly Used Productivity Measurement Approaches in
81
Companies
4.4 The Task-Oriented Total Productivity Measurement (TOTP) Model 86
4.5 Case Study: Comparisrison of the Manual and Computer-Aided
Methods of Assembling Printed Circuit Boards Using the Task-Oriented 105
Total Productivity Model
4.6 Case Study: Robotic Device Impact on Total Productivity in Printed
112
Circuit Board Assembly Task
Page ix

4.7 Case Study: Computer-Aided Manufacturing Impact on Total

118
Productivity in PCB Assembly Task
4.8 Technology-Oriented Total Productivity Measurement System 125
4.9 The Comprehensive Productivity Measurement Model 135
References 136
5 Productivity and Quality Improvement Through Statistical Process
139
Control
5.1 Process Control Definition 139
5.2 A Process Control System Definition 140
5.3 The Key Requirements of Process Management 141
5.4 Benefits of the Process Control Management System 142
5.5 Implementation Steps for Statistical Process Control 143
5.6 Basic Concepts for Designing Experiments in the Business Process
160
Environment
5.7 Case Study: Statistical Process Control in a Group Technology
166
Environment
5.8 Basic Statistical Tools for Data Analysis 170
5.9 Basic Review of Probability 178
5.10 Confidence Interval, Limits Level, and Point Estimate 180
5.11 Hypothesis Testing 180
5.12 Basic Analysis of Variance Technique 186
References 189
6 Productivity and Quality Planning 191
6.1 Comprehensive Productivity Planing 191
6.2 Definition and Benefits of Comprehensive Productivity Planning 194
6.3 Features of Comprehensive Productivity Planning 195
6.4 Comprehensive Productivity Planning as a Component in the
196
Productivity Management Triangle
6.5 Comprehensive Productivity Planing Stages 197
6.6 Implementation Methodology 198
6.7 Common Problems Encountered During Implementation and Ways to
207
Counter Them
6.8 Relationship Between Productivity Planning and Measurement 209
6.9 Basic Forecasting Techniques for Productivity and Quality Planning 209
6.10 Quality Planning 214
6.11 Technological Forecasting: A Key Ingredient in the Overall Planning
218
Process
References 227
Page x

7 Techniques for Resolving Quality Problems 229

7.1 From Quality Circles to Process Improvement Teams 229
7.2 Problem Resolution Model 230
7.3 Quality Error Mapping 231
7.4 Nominal Group Technique 232
7.5 Benefits of the Quality Error Removal Technique 234
7.6 QER Task Boundaries 235
7.7 QER Key Principles and Guidelines 235
7.8 Implementation Methodology 239
7.9 Case Study: Implementation of the QER Technique in an Assembly
239
Task
7.10 Case Study: Implementation of the QER Technique in a Bank Clerical
242
Task
7.11 Problems Encountered During Implementation: Summary 243
References 244
8 Productivity and Quality Improvement Strategies and Techniques 245
8.1 Factors Affecting Employee Job Performance and Productivity 245
8.2 Productivity and Quality Improvement Techniques 247
8.3 Production and Service Improvement Technique (PASIT) 249
8.4 PASIT Implementation Methodology 251
8.5 Basic Tools Needod for PASIT Implementation 264
References 265
9 Techniques for Improving Employee Productivity, Morale and
267
Employment
9.1 Work Measurement and Job Simplification Program 267
9.2 Management Development Program 269
9.3 Motivation of Employees 272
9.4 Employee Empowerment 272
9.5 Motivating Workers in a High-Technology Production Environment 276
9.6 Morale Management 279
9.7 Technology Factor in Productivity and Quality Improvement 279
9.8 Design Impact 281
9.9 Other Factors that Improve Morale 282
References 283
Page xi

10 Establishing and Managing a Productivity and Quality Improvement

285
Program
10.1 Key Elements Necessary for a Successful Productivity and Quality
285
Program
10.2 Organization for Productivity and Quality Managment 291
10.3 Overcoming Problems 292
10.4 Checklist for Productivity and Quality Management 297
References 312
11 Consumer Satisfaction: A Drive for Quality and Productivity
313
Improvement
11.1 Product and Service Design 315
11.2 Product and Service Delivery 315
11.3 Customer Relations and Management 315
12 Conclusion 317
Appendix A Statistical Tables 322
Appendix B Blank Work Forms for Statistical Process Control
329
Implementation
Appendix C Constants and Formulas for Control Charts 343
Appendix D Blank Work Forms for the Implementation of Task Analysis
346
Technique (TAT) for Cost of Quality Computations
Appendix E Selected Productivity and Quality Centers 352
Appendix F Glossary of Terms 356
Appendix G Bibliography 369
Index 381
Page 1
Chapter 1
Productivity and Quality Management Concepts

1.1 PRODUCTIVITY AND QUALITY IN THE MODERN

BUSINESS ENVIRONMENT

In this era of technological explosion, a company or organization,

regardless of its size, faces four major problems. For any project there is
a limited supply of resources, such as capital, materials, energy, and
labor. Further, competitive environments demand a better quality product
or service at the existing price or at a lower price. Survival through
acceptable profit levels requires maintaining the current market share or
improving it as much as possible. In order to attain the end goal of profit,
a business unit typically has multiple objectives. Problems arise when
allocating scarce resources to the variety of alternative purposes
competing for their use. Matching objectives with resources to attain end
results is not an easy task. Only those organizations that manage
productivity and quality as an ongoing activity will be able to deal with
these problems.

At the global level, the problems of inflation, international trade

competition, and unemployment are directly affected by the level of
productivity growth and the quality of goods and services. The cyclic
effects of a low productivity growth rate on the national economy are
shown schematically in Figure 1.1. The impact of poor quality goods and
services on the survival of any economic unit is presented in Figure 1.2.
Page 2

Figure 1.1 The cyclic effects of low productivity growth. (Source:

Edosomwan, 1985b)

In this age, every nation concerns itself with a high standard of living and
better quality of work life and every organization concerns itself with high
profit levels and an increased market share. For consumers who are
concerned with the quality or ‘‘fitness for use” of the goods and services
offered, therefore, productivity and quality management constitute the
major driving force for survival.

1.2 BASIC DEFINITIONS OF PRODUCTIVITY AND QUALITY

1.2.1 Productivity
Productivity was mentioned for the first time in an article by Quesnay in
1776, and since then most authors have defined it in different ways.
Table 1.1 presents a chronological classification of productivity definitions
and measures that have been offered by both researchers and
practitioners. A careful examination of these definitions reveals that some
authors have defined productivity in a vague manner and others,
precisely. One major
Page 3

Figure 1.2 The impact of poor quality in any economic unit.

similarity that could be inferred from these various definitions of

productivity is that most authors viewed productivity as a “measure” of
output, to one input, two inputs, or total input.

The measure also pertains to how well resources are utilized. Three
different forms of productivity have been accepted universally by most
researchers and practitioners. For the purpose of this text, the three
forms of productivity are presented as follows (Kendrick and Creamer,
1965; Edosomwan, 1985b):

1. Total productivity is “the ratio of total output to all input factors.”

2. Total factor productivity is ‘‘the ratio of total output to the sum of
associated labor and capital (factor) inputs.”
3. Partial productivity is the “ratio of total output to one class of input.”

1.2.2 Quality
Crosby (1979) defines quality as “conformance to requirements.” This
definition requires detailed clarification of all relevant quality
characteristics and total evaluation and understanding of the entity
involved. Quality
Page 4

Table 1.1 Definitions and Measures of Productivity in Chronological Sequence

Type of
productivity
measure

Total
YearAuthor Definitions Partial Total
Factor

Mentioned productivity for the first time as

1776 Quesnay
relation of output to input
1883 Littre “Faculty to produce”
“Ratio of total output to the amount of labor
1937 Weintraub X
of contractually employed workers”
“The change in product obtained for resources
1955 Davis
expended”
“A ratio of output to input, and a productivity
index is always the ratio for one period (or
1962 Fabricant
place) relative to the corresponding ratio for
another period (or place)”
1. Total productivity is the “ratio of real gross
Kendrick output to a combination of all corresponding
1965 and ratio for inputs: labor, capital, and X
Creamer intermediate products purchased outside the
firm or industry’’
2. Total factor productivity is the “ratio of the
real products originating in the economy,
X
industry, or firm to the sum of associated labor
and capitol (factor) inputs”
3. Partial productivity is the “ratio of gross or
X
net output to one class of input
(Personal productivity) = revenues per
employee; net earnings per employee; (capital
 productivity) = revenues per stock holders
1970 Dewitt equity $; operating income per stock holders X
equity $; (facilities productivity) = revenues
per plant and equipment $; operating income
per plant and equipment $
“Productivity is a particular type of behavior
Soliman
within an organization. It may be high, a
1971 and
positive and desirable behavior; or low, a
Hartman
negative and undesirable behavior”
Craig
Total productivity is a “ratio of total output to
1972 and X
total input”
Harris
1976 Siegal “Family of ratios of output to input”
1976 Hines “Ratio of total output to total input” X
1976 Mundel Productivity Index = 100 × outputs / inputs X
Page 5

Table 1.1 Definitions and Measures of Productivity in Chronological Sequence

(Continued)

Type of
productivity
measure

Total
YearAuthor Definitions Partial Total
Factor

“The ratio of some measure of output to

some measure of input—a difficult measure
1977 Ross at best, is usually attributed to the improved
efficiency of some specific resource such as
capital, money, materials, or technology”
Taylor Total factor productivity =
1977 and total value – added output X
Davis total input (capital and labor)
“Productivity is the measure of how well
resources are brought together in
organizations and utilized for accomplishing
1978 Mali X X
a set of results. Productivity is reaching the
highest level of performance with the least
expenditure of resources.”
“As the ratio of performance towards
1978 Stewart organizational objectives to the totality of X
input parameters”
‘‘Ratio of total tangible output (in physical
1979 Sumanth or value terms) to the sum of all the tangible X
Inputs (in cost terms)”
Total productivity is a “ratio of all
measurable output (finished units, partial
units, and other outputs associated with
quantity produced) to the sum of all
1985 Edosomwanmeasurable inputs (computer expenses, X
 robotics expenses, labor, materials, energy
capital, data processing expenses, and other
administrative expenses)”

when viewed as conformance to specification has great potential for

being a very effective business strategy. However, this definition can
result in a lack of commitment to quality by members of an organization
that does not acknowledge the prescribed specification. There is also a
danger of adherence to the specification even if it is not the most
productive method to accomplish the desired end.

Juran (1979) defines quality as “fitness for use.” The unique aspect of
this definition is the inclusion of the concept of the user. Quality is viewed
as one that requires every member of the organization to provide the next
Page 6

Figure 1.3 Interrelationships between fitness for use parameters.

(Source: Juran, 1979, pp. 2–9)

person in the process with an acceptable product or service. This means

that everyone is responsible to perform a task in such a manner that the
product can be used immediately and in the most efficient manner
possible. Juran further identified four important parameters of fitness for
use as

1. Quality of design
2. Quality of conformance
3. The abilities
4. Field service

The interrelationships among these parameters are presented in Figure

1.3. Quality is a term that has valuable meaning to both producer and
customer, as shown in Figure 1.4. The producer views fitness for use in
terms of the ability to process and produce with less rework, less scrap,
minimal downtime, and high productivity.
Page 7

Figure 1.4 Supplier, producer, and customer fitness for use relationships.

Such factors as training, the production process, motivation levels,

procedures, and quality assurance systems can have an effect on the
quality of conformance.

Quality Characteristics
These are elements of fitness for use that typify the variety of uses of a
given product. Quality characteristics may be of several types:

1. Time-oriented (serviceability, reliability, maintainability)

2. Sensory (color, taste, beauty, appearance, and others)
3. Structural (including frequency, weight, length, and viscosity)
4. Commercial (warranty)
5. Behavioral or ethical (fairness, honesty, courtesy, and so on)

Quality has different meanings to different people depending who is

involved. The fact, views, and perception on quality are summarized:
Page 8

Quality in fact
Doing the right thing
Doing it the right way
Doing it right the first time
Doing it on time

Quality in perception
Delivering the right product
Satisfying your customer’s needs
Meeting your customer’s expectations
Treating every customer with integrity, courtesy, and respect
Traditional View

1. Productivity and quality are conflicting goals.

2. Quality is defined as conformance to specifications or standards.
3. Quality is measured by degree of nonconformance.
4. Quality is achieved through inspection.
5. Some defects are allowed if the product meets minimum quality
standards.
6. Quality is a separate function and focused on evaluating
production.
7. Workers are blamed for poor quality.
8. Supplier relationships are short-term and cost-oriented.
Total Quality Management View

1. Productivity gains are achieved through quality improvements.

2. Quality is conformance to correctly defined requirements satisfying
user needs.
3. Quality is measured by continuous process/product improvements
satisfying user needs.
4. Quality is determined by product design and is achieved by
effective process controls.
5. Defects are prevented through process-control techniques.
6. Quality is part of every function in all phases of the product life
cycle.
7. Management is responsible for quality.
8. Supplier relationships are long-term and quality oriented.
Page 9

Figure 1.5 Productivity and quality management triangle.

Improvements in quality are therefore made by examining the design and

conformance phases with their associated characteristics through the
application of techniques and methods (changes in design, timing,
inspection procedures, process control procedures, and so on).

1.3 FORMAL DEFINITION OF PRODUCTIVITY AND

QUALITY MANAGEMENT

Productivity and quality management will be defined as follows.

Productivity and quality management is an integrated process involving
both management and employees with the ultimate goal of managing the
design, development, production, transfer, and use of the various types of
products or services in both the work environment and the marketplace.
The process requires the total involvement of everyone in the planning,
measurement, evaluation, control, and improvement of productivity and
quality at the source of production or service center.
Page 10

1.4 THE PRODUCTIVITY AND QUALITY MANAGEMENT

TRIANGLE

The productivity and quality management triangle (PQMT) shown in

Figure 1.5 encompasses an information system that provides input of
information relevant to the planning, performance, and measurement
processes and implementation of corrective actions and techniques that
improve productivity. For an organization initiating comprehensive
productivity and quality management, measurement, control, and
evaluation is the first stage in the PQMT triangle. Once a set of measures
has been developed, plan targets and strategies are formulated. Based
on these strategies, short-range objectives are formulated and
operational improvement techniques are then used to implement short-
and long-range objectives. In order to assess the extent to which the
improvements were successfully implemented, measurements, control,
and evaluation are performed again. This triangular relationship thus
continues as long as the comprehensive productivity and quality program
exists in the organization.

1.5 BENEFITS OF PRODUCTIVITY AND QUALITY

MANAGEMENT

The management of productivity and quality can provide the following

benefits to organizations.

1. Productivity and quality management will enable the consumer to

pay low prices for goods and services because the cost of
production is reduced owing to reduced rework and gains in,
productivity.
2. Productivity and quality management enable the effective
utilization of resources. More goods and services are produced for
a reasonable amount of expended resources.
3. Productivity and quality management provide the basis for higher
real earnings for employees. The reduction in the cost of
production of goods and services can allow increases in wages
 without significantly offsetting gains in total productivity.
4. Productivity and quality management components (planning and
analysis, measurement, evaluation and control, and improvement
and monitoring) provide an organization with the strength to deal
with internal operating weakness and external competition.
Page 11

1. Productivity and quality management will enable an organization

to be more profitable because quality improvement results in
reduced rework reduction in scrap, better utilization of tools and
equipment, and less work in process inventory, which in turn leads
to higher productivity. (Profits = revenue from sales—cost of
manufacture.) Minimization of the cost of manufacture for goods
and services improves the profit margin. The production of good
quality products also improves the market share because the
satisfied customer will buy more and will recommend the product
to another consumer.
2. Productivity and quality management enable the public to realize
greater social benefits through increased public revenues from
organizations.

1.6 TOP MANAGEMENT ROLE IN PRODUCTIVITY AND

QUALITY

Deming (1982, pp. 13–59) discusses what top management must do to

improve both productivity and quality. The fourteen points offered by
Deming have been successfully implemented in Japan and most of the
industrialized countries in the world. A summary of Deming’s fourteen
points follows.

1. Create constancy of purpose toward improvement of product and

service, with a plan to become competitive and to stay in business.
Decide to whom top management is responsible.
2. Adopt the new philosophy. We are in a new economic age. We
can no longer live with commonly accepted levels of delays,
mistakes, defective materials, and defective workmanship.
3. Cease dependence on mass inspection. Require, instead,
statistical evidence that quality is built in to eliminate the need for
 inspection on a mass basis. Purchasing managers have a new job
and must learn it.
4. End the practice of awarding business on the basis of price tag.
Instead, depend on meaningful measures of quality, along with
price. Eliminate suppliers that cannot qualify with statistical
evidence of quality.
5. Find problems. It is management’s job to work continually on the
system (design, incoming materials, composition of material,
Page 12

1. Institute modern methods of training on the job.

2. Institute modern methods of supervision of production workers.
The responsibility of foremen must be changed from sheer
numbers to quality. Improvement of quality will automatically
improve productivity. Management must prepare to take
immediate action on reports from foremen concerning such
barriers as inherited defects, machines not maintained, poor tools,
and fuzzy operational definitions.
3. Drive out fear so that everyone may work effectively for the
company.
4. Break down barriers between departments. People in research,
design, sales, and production must work as a team, to foresee
problems of production that may be encountered with various
materials and specifications.
5. Eliminate numerical goals, posters, and slogans for the work force
that ask for new levels of productivity without providing methods.
6. Eliminate work standards that prescribe numerical quotas.
7. Remove barriers that stand between the hourly worker and “right
to pride of workmanship.”
8. Institute a vigorous program of education and retraining.
9. Create a structure in top management that will push every day the
other thirteen points.

1.7 CAUSES OF PRODUCTIVITY DECLINE IN COMPANIES

Mali (1978, pp. 24–32) presented twelve causes for the decline of
productivity in organizations:

1. The inability to measure, evaluate, and manage the productivity of

white-collar employees can cause a shocking waste of resources.
2. Rewards and benefits given without requiring the equivalent
 productivity and accountability causes spiraling inflation.
3. Diffused authority and inefficiency in complex organizations cause
delays and time lags.
4. Organizational expansion that lower productivity growth results in
soaring costs.
Page 13

1. There is low motivation among a rising number of affluent workers

with new attitudes.
2. Late deliveries may be caused by schedules that have been
disrupted by scarcity of materials.
3. Unresolved human conflicts and difficulties in team work result in
the firm’s ineffectiveness.
4. Increased legislative intrusions or antiquated laws result in
constrained management options and prerogatives.
5. Overspecialization in work processes results in monotony and
boredom.
6. Rapid technological changes and high costs result in a decline of
new opportunities and innovations.
7. Increasing demand for leisure time causes disruption of time
commitments.
8. A practitioner is unable to keep pace with the latest information
and knowledge.

1.8 STRATEGIES FOR IMPLEMENTING QUALITY

PROGRAMS

There are seven different strategies being used in public and private
organizations to implement continuous quality improvement.

1. The Quality Award Criteria Approach: This award focuses on the

use of criteria such as the Baldrige Award model, President’s
Award criteria or the Deming Prize to evaluate overall
performance. The elements of the quality award criteria are also
used as benchmarks to identify areas for improvement. The most
significant uses of the award approach involve assessment of
work process, assessment of suppliers and total organization
performance, setting up a quality system, communications,
 education, and training.
2. The World-Class Company Benchmarking Approach: In this
approach, individuals or organizational teams visit companies that
are leaders in continuous quality improvement and determine what
success they have had and how they have accomplished it. The
individuals or team would tailor and integrate learned ideas with
their own and thus develop their own organizational approach,
which would be adopted for their own organization. This method
Page 14

1. The Employee Involvement-Based Approach: This approach

focuses on using the strengths and suggestions of human
resources to embark on continuous quality improvement efforts.
Under this approach, all employees are encouraged to practice
creativity and practical risk taking during the execution of their jobs
People are treated as the greatest asset and empowered to make
decisions to improve quality, productivity, and overall performance.
2. The Customer-Driven Improvement Approach: In this approach,
companies cultivate their customers. Customer suggestions and
statements of requirements are used to develop improvement
strategies for product and services. The management principles
encourage cooperation and partnership between supplies, process
owners, and internal and external customers.
3. The Total Quality Systems Approach: This approach focuses on
the key systems, tools and techniques for achieving quality and
productivity improvement. Tools and techniques such as quality
function development, cause and effect diagrams, design of
experiments, quality circles, quality error removal technique,
statistical process control, and Taguchi methods are applied
continuously to improve overall performance and quality.
4. The Japanese Total Quality Approach: In this approach,
organizations study the successful implementation strategies and
techniques used by the Deming Prize-winning companies and use
this experience to develop short-term and long-term continuous
quality improvement plans. The success of this approach rests on
how well companies are best able to adapt lessons learned from
the Japanese companies to their culture and environment.
5. The Guru Approach: This approach uses the theories, principles,
teachings and lessons of a leading quality expert. The guru
method used as a benchmark to determine organizational
strengths and weaknesses. The danger in using this approach is
that no guru has all the answers to organizational, cultural and
business problems. However, the tools and techniques
recommended by gurus can be effective in improving
performances of systems, people and work processes.
Page 15

The quest for quality improvement involves a race with no finish line. It
requires understanding and selection of the appropriate approach to
make the desired changes and improvements in organizational
performance. There is no right or wrong approach, only an approach that
best meets the objectives of the organization. Regardless of which
approach is selected, the organization should concentrate on improving
quality, productivity and total customer satisfaction. The benefits of such
an approach will be improved profitability, market share, and employee
satisfaction.

1.9 EFFECTIVE SYSTEM MANAGEMENT FOR

PRODUCTIVITY AND QUALITY IMPROVEMENT

In order to improve productivity and quality, an effective management

system must be in place. Such a management system requires applying
common sense and creativity in making the required changes in policies,
organizational structure, and procedures that allow a fertile environment
for productivity and quality improvement. The following are basic
requirements.

1. Management philosophy must be one that is geared toward

continuous productivity and quality improvement at the source
production or service. Management of productivity and quality is
not a one-time action. It is a continuous process that involves both
management and employees, in producing and delivering good
products and services.
2. Management and employee commitment to quality and
productivity improvement can be translated into a written policy.
There must be documentation of such a policy and clear
specification of all the necessary details to assure it.
3. Management philosophy must accept no levels of defect. Low
productivity is not acceptable.
4. There must be a system in place for measurement, control and
evaluation, planning and analysis, and improvement and
monitoring of all activities.
5. There must be a data base for the storage and retrieval of
information about the process.
6. There must be a clear definition of process parameters and
variables. Input and output elements must be clearly identified.
Page 16

1. All process parameters must be characterized with complete

understanding of repeatability and variability.
2. There must be process ownership by everyone involved in the
management process.
3. Productivity and quality improvements based on the
implementation of key actions must be documented and rewarded
on a timely basis.
4. The management information system must provide a real time
feedback mechanism to everyone involved in the productivity and
quality improvement efforts.
5. There should be a provision for ongoing management and
employee training in productivity and quality improvement
techniques.
6. There should mechanisms for the identification and removal of
barriers between functional departments to facilitate open
communication.
7. Management must provide clear guidance and clear goals and
objectives, specify short-and long-term commitments, and set the
direction for excellence.
8. The attainment of a good quality product should be through
prevention of defects, not through detection of defects.
9. The removal of defects from a process should be done through
root cause analysis and the implementation of proper corrective
action. Cost inspections should be discouraged. The strategy
should be that which utilizes sampling inspection when necessary
and no inspection when it is not warranted.

1.10 PRODUCTIVITY AND QUALITY MANAGEMENT

HIERARCHY

In order for a productivity and quality management system to provide

useful and meaningful results, it is important for the level of emphasis to
be clearly specified and understood within the productivity and quality
management hierarchy (PQMH) shown in Figure 1.6. The productivity
and quality management hierarchy suggests that productivity and quality
management should start at the basic levels (individuals, task, and
technology). If all the associated inputs and outputs are clearly identified
and managed properly at this level, the results have tremendous impact.
It becomes less cumbersome to quantify and manage productivity and
quality at the other eight different levels. The PQMH also provides a
basis to identify the productivity and quality issues from a global
perspective. Most
Page 17

Figure 1.6 Productivity and quality management hierarchy.

importantly, it shows that the productivity and quality management of any

nation starts from the basic units. At each level of the PQMH, techniques
and methodology are required for the planning and analysis process,
performance and measurement process, and improvement and
monitoring process. Aggregation technique is usually applied to
understand productivity and quality management issues at the higher
levels (levels 4–9). It is usually helpful if there are consistent and
conducive policies affecting productivity and quality at the higher levels of
the PQMH. In Japan, for example, there is partnership between the
government and industry on issues that affect productivity and quality.

1.11 PERSPECTIVES ON QUALITY

1.11.1 Crosby Philosophy

Crosby’s approach focuses on organization-wide effort to improve quality
with emphasis on controlling the cost of quality. Using Crosby’s
philosophy an organization is treated almost as if it were a whole, living
organism that evolves through time toward higher and higher levels of
self awareness.
Page 18

Table 1.2 Crosby’s Quality Management Maturity Grid

Measurement Stage I: Stage II: Stage III: Stage IV: Stage V:

categories Uncertainty Awakening Enlightenment Wisdom Certainty

Supports
quality Regards
management Learns about quality
Fails to see Participates
Management in theory but quality management
quality as a personally in
understanding is unwilling to management as essential
management quality
and attitude provide the and becomes to the
tool. activities.
necessary supportive. company’s
money or success.
time.
A strong
quality leader
has been
Quality
appointed, but
activities are Quality Quality
quality Quality
limited to the department manager is
activities manager is
manufacturing reports to top an officer of
Quality remain on the board
or engineering management, the company.
organization focused on of directors.
department and its leader Prevention
status appraisal and Prevention is
and are is active in activities
sorting and the quality
largely company have become
are still activity.
appraisal and management. important
limited to
sorting.
manufacturing
and
engineering.
Problems are
Teams are Problems are
fought as they
established to resolved in an Except in the
occur and are Problems are
attack major orderly most unusual
Problem seldom fully identified
handling resolved; problems, but fashion, and early in their cases,
‘‘fire- the approach corrective development. problems are
fighting” remains short action is a prevented.
dominates. term. regular event.
Cost of
Reported: Reported: Reported:
quality as Reported: 5% Reported: 8%
unknown 6.5% Actual: 2.5% Actual:
percentage of Actual: 18% Actual: 12%
Actual: 20% 8% 2.5%
sales
Quality
Implements Continues
Activities are improvement
Quality the 14-step the 14-step
No organized motivational is a regular
improvement program with program and
activities and short- and
action full starts Make
term continuing
understanding. Certain
activity.
“Because of
management
commitment
“We
Summation of“We don’t “Must we and quality “We know
routinely
company know why we always have improvement why we don’t
prevent
quality have quality quality programs, we have quality
defects from
posture problems.” problems?” are identifying problems.”
occurring.”
and resolving
our quality
problems.”

Source: Quality Is Free (New York: McGraw-Hill, 1979), reprinted with permission
Page 19

The real meaning of quality, Crosby asserts in Quality Is Free, suffers

from several erroneous assumptions.

Quality is not:

Goodness, or luxury, or shininess

Intangible, therefore not measurable
Unaffordable
Originated by the workers
Something that originates in the quality department

Quality is:

Conformance to requirements; nonquality is nonconformance

To put this definition in practice, Crosby assumes that quality either is or

is not present in the whole organization; that quality is the responsibility
of everyone in the organization; and that quality is measurable. In
addition, he cautions the quality-bound executive, “The process of
instilling quality improvement is a journey that never ends. Changing a
culture so that it never slips back is not something that is accomplished
quickly.”

Crosby’s Quality Management Maturity Grid

The first step for an organization moving toward a quality management
profile is to determine its current level of “management maturity.” Table
1.2, Crosby’s Quality Management Maturity Grid, is used for this purpose.
Along the left-hand margin are six measures of the sophistication of an
organization’s management style, including how the organization handles
problems, the attitude of top management, and the cost of quality to the
firm. Across the top are five levels, or stages, of quality management.

Crosby further outlined fourteen steps to help organizations achieve

quality improvement.

Step 1. Management Commitment

Top management must become convinced of the need for quality
improvement and must make its commitment clear to the entire company.
This should be accompanied by a written quality policy, stating that each
person is expected to “perform exactly like the requirement, or cause the
requirement to be officially changed to what we and the customers really
need.”
Page 20

Step 2. Quality Improvement Team

Management must form a team of department heads (or those who can
speak for their departments) to oversee quality improvement. The team’s
role is to see that needed actions take place in its departments and in the
company as a whole.

Step 3. Quality Measurement

Quality measures that are appropriate to every activity must be
established to identify areas needing improvement. In accounting, for
example, one measure might be the percentage of late reports; in
engineering, the accuracy of drawings; in purchasing, rejections due to
incomplete descriptions; and in plant engineering, time lost because of
equipment failures.

Step 4. Cost of Quality Evaluation

The controller’s office should make an estimate of the costs of quality to
identify areas where quality improvements would be profitable.

Step 5. Quality Awareness

Quality awareness must be rased among employees. They must
understand the importance of product conformance and the costs of
nonconformance. These messages should be carried by supervisors
(after they have been trained) and through such media as films, booklets,
and posters.

Step 6. Corrective Action

Opportunities for correction are generated by Steps 3 and 4, as well as
by discussions among employees. These ideas should by brought to the
supervisory level and resolved there, if possible. They should be pushed
up further if that is necessary to get action.

Step 7. Zero-Defects Planning

An ad hoc defects committee should be formed from members of the
quality improvement team. This committee should start planning a zero
defects program appropriate to the company and its culture.
Step 8. Supervisory Training
Early in the process, all levels of management must be trained to
implement their part of the quality improvement program.

Step 9. Zero-Defects Day

A Zero-Defects Day should be scheduled to signal to employees that the
company has a new performance standard.

Step 10. Goal Setting

To turn commitments into action, individuals must establish improvement
goals for themselves and their groups. Supervisors should meet with their
people and ask them to set goals that are
Page 21

specific and measurable. Goal lines should be posted in each area and
meetings held to discuss progress.

Step 11. Error Cause Removal

Employees should be encouraged to inform management of any
problems that prevent them from performing error-free work. Employees
need not do anything about these problems themselves; they should
simply report them. Reported problems must then be acknowledged by
management within 24 hours.

Step 12. Recognition

Public, nonfinancial appreciation must be given to those who meet their
quality goals or perform outstandingly.

Step 13. Quality Councils

Quality professionals and team chairpersons should meet regularly to
share experiences, problems, and ideas.

Step 14. Do It All Over Again

To emphasize the never-ending process of quality improvement, the
program (Steps 1–13) must be repeated. This renews the commitment of
old employees and brings new ones into the process.

1.11.2 Juran’s Philosophy

Juran’s approach to quality management focuses on three main areas:
quality planning, quality control, and quality improvements. Juran
advocates that these three areas must be combined in order to achieve
significant results from quality improvement efforts. Juran identified seven
areas to help organizations achieve breakthroughs in quality
improvement. The areas are:

1. Breakthrough in attitudes. Managers must first prove that a

breakthrough is needed and then create a climate conducive to
change. To demonstrate need, data must be collected to show the
extent of the problem; the data most convincing to top
management are usually cost-of-quality figures. To get the
 resources required for improvement, expected benefits must be
presented in terms of cost and return on investment.
2. Identify the vital few projects. Pareto chart analysis is used to
distinguish the vital few projects from the trivial many and to set
priorities based on problem frequency.
3. Organize for breakthrough in knowledge. Two organizational
entities should be established: a steering group and a diagnostic
Page 22

1. Conduct the analysis. The diagnostic group studies symptoms,

develops hypotheses, and experiments to find the problem’s true
causes. It also tries to determine whether defects are primarily
operator-controllable or management-controllable. (A defect is
operator-controllable only if it meets three criteria: operators know
what they are supposed to do, have the data to understand what
they are actually doing, and are able to regulate their own
performance.) Theories can be tested by using past data and
current production data and by conducting experiments With this
information, the diagnostic group then proposes solutions to the
problem.
2. Determine how to overcome resistance to change. The need for
change must be established in terms that are important to the key
people involved. Logical arguments alone are insufficient.
Participation is therefore required in both the technical and social
aspects of change.
3. Institute the change. Departments that must take corrective action
must be convinced to cooperate. Presentations to these
departments should include the size of the problem, alternative
solutions, the cost of recommended changes, expected benefits,
and efforts taken to anticipate the change’s impact on employees.
Time for reflection may be needed, and adequate training is
essential.
4. Institute controls. Controls must be set up to monitor the solution,
see that it works, and keep abreast of unforeseen developments.
Formal follow-up is provided by the control sequence used to
monitor and correct sporadic problems.

1.11.3 Deming’s Philosophy

Deming’s philosophy focuses on putting quality in human terms. He
believes that when an organization’s workforce is committed to doing
good work and has solid managerial process in which to perform, quality
will be achieved and results will flow naturally. Deming believes that
business and management in particular are in crisis because of what he
referred to as the seven deadly diseases:
Page 23

1. Lack of constancy of purpose. A company that is without

constancy of purpose has no long-range plans for staying in
business. Management is insecure, and so are employees.
2. Emphasis on short-term profits. Looking to increase the quarterly
dividend undermines quality and productivity.
3. Evaluation by performance, merit rating, or annual review of
performance. The effects of these are devastating—teamwork is
destroyed, rivalry is nurtured. Performance ratings build fear and
defections in the ranks of management.
4. Mobility of management. Job-hopping mangers never understand
the companies they work for and are never there long enough to
follow through on long-term changes that are necessary for quality
and productivity.
5. Running a company on visible figures alone. The most important
figures are unknown and unknowable—the “multiplier’’ effect of a
happy customer, for example.
6. Excessive medical costs for employee health care, which increase
the final costs of goods and services.
7. Excessive costs of warranty, fueled by lawyers who work on the
basis of contingency fees.

Deming further proposed the following fourteen points of quality

management:

1. Create constancy of purpose for improvement of product and

service. Deming suggests a radical new definition of a company’s
role: Rather than to make money, it is to stay in business and
provide jobs through innovation, research, constant improvement,
and maintenance.
2. Adopt the new philosophy. Americans are too tolerant of poor
workmanship and sullen service. We need a new religion in which
 mistakes and negativism are unacceptable.
3. Cease dependence on mass inspection. American firms typically
inspect a product as it comes off the assembly line or at major
stages along the way; defective products are either thrown out or
reworked. Both practices are unnecessarily expensive. In effect, a
company is paying workers to make defects and then to correct
them. Quality comes not from inspection but from improvement of
the process. With instruction, workers can be enlisted in this
improvement.
4. End the practice of awarding business on the price tag alone.
Purchasing departments customarily operate on orders to seek the
lowest price vendor. Frequently, this leads to supplies of low
Page 24

1. Improve constantly and forever the system of production and

service. Improvement is not a one-time effort. Management is
obligated to continually look for ways to reduce waste and improve
quality.
2. Institute training. Too often, workers have learned their job from
another worker who was never trained properly. They are forced to
follow unintelligible instructions. They can’t do their jobs well
because no one tells them how to do so.
3. Institute leadership. The job of a supervisor is not to tell people
what to do, nor to punish them, but to lead. Leading consists of
helping people do a better job and of learning by objective
methods who is in need of individual help.
4. Drive out fear. Many employees are afraid to ask questions or to
take a position, even when they do not understand what their job
is or what is right or wrong. They will continue to do things the
wrong way, or not do them at all. The economic losses from fear
are appalling. To ensure better quality and productivity, it is
necessary that people feel secure.
5. Break down barriers between staff areas. Often a company’s
departments or units are competing with each other, or have goals
that conflict. They do not work as a team so they cannot solve or
foresee problems. Worse, one department’s goals may cause
trouble for another
6. Eliminate slogans, exhortations, and targets for the work force.
These never helped anybody do a good job. Let workers formulate
their own slogans.
7. Eliminate numerical quotas. Quotas take into account only
numbers, not quality or methods. They are usually a guarantee of
inefficiency and high cost. A person, to hold a job, meets a quota
at any cost, without regard to damage to the company.
8. Remove barriers to pride of workmanship. People are eager to do
a good job and distressed when they cannot. Too often, misguided
supervisors, faulty equipment, and defective materials stand in the
 way of good performance. These barriers must be removed.
9. Institute a vigorous program of education and retraining. Both
management and the work force will have to be educated in the
new methods, including teamwork and statistical techniques.
10. Take action to accomplish the transformation. It will require a
special top management team with a plan of action to carry out the
Page 25

In the next chapter, the components of productivity and quality

management will be presented after a discussion of productivity and
quality management challenges. It will also be show that the one major
issue that poses the greatest challenge is our ability to effectively
manage productivity and quality during dynamic change in the
technological life cycle.

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Business Week, 1982. Quality—The U.S. drives to catch up, November

1.

Craig, C. E., and C. R Harris, 1972. Productivity concepts and

measurement—a management viewpoint. Master’s thesis, MIT,
Cambridge, Massachusetts.

Craig, C. E., and C. R. Harris, 1973. Total productivity measurement at

the firm level. Sloan Management Review, Vol. 14, No. 3, pp. 13–39.

Crosby, P. B., 1979. Quality Is Free. McGraw-Hill, New York.

Davis, H. S., 1955. Productivity Accounting. University of Pennsylvania

Press, Philadelphia.

Deming, E. W., 1982. Quality, Productivity, and Competitive Position. MIT

Press, Cambridge, Massachusetts.

Dewitt, F., 1970. Technique for measuring management productivity.

Management Review, Vol. 59, pp. 2–11.

Edosomwan, J. A., 1980. Implementation of the total productivity model

in a manufacturing company. Master’s thesis, Department of Industrial
Engineering, University of Miami, July.

Edosomwan, J. A., 1985a. A methodology for assessing the impact of

computer technology on productivity, production quality, job satisfaction
and psychological stress in a specific assembly task. Doctoral
dissertation, Department of Engineering Administration, The George
Washington University, Washington, D.C. 20052, January.

Edosomwan, J. A., 1985b. A task-oriented total productivity measurement

model for electronic printed circuit board assembly. International
Electronic Assembly Conference Proceeding, October 7–9, Santa Clara,
California.

Edosomwan, J. A., 1986a. A conceptual framework for productivity

planning. Industrial Engineering, January.

Edosomwan, J. A. 1986b. Statistical process control in group technology

production environment. SYNERGY ’86 Proceedings, June 16–18,
Page 26

Universal City, California. Sponsored by Society of Manufacturing

Engineers, Computer and Automated Systems Association, and the
American Production and Inventory Control Society.

Edosomwan, J. A., 1987. The meaning and management of productivity

and quality. Industrial Engineering, January.

Fabricant, S., 1962. Which productivity? Perspective on a current

question. Monthly Labor Review, Vol. 86, No. 6, pp. 609–613.

Fabricant, S., 1969. A Primer on Productivity. Random House, New York.

Hines, W. W., 1976. Guidelines for implementing productivity

measurement. Industrial Engineering, Vol. 8, No. 6.

Juran, J. N., 1979. The Quality Control Handbook. McGraw-Hill, New

York.

Juran, J. M., and F. M. Gryna, Jr., 1980. Quality Planning and Analysis.
McGraw-Hill, New York.

Kendrick, J. W., in collaboration with the American Productivity Center,

190 Improving Company Productivity Handbook with Case Studies. The
John Hopkins University Press, Baltimore.

Kendrick, J. W., and D. Creamer, 1965. Measuring Company

Productivity: Handbook with Case Studies. Studies in Business
Economics, No. 89, National Industrial Conference Board, New York.

Mali, P., 1978. Improving Total Productivity: MBO Strategies for Business,
Government and Not-for-Profit Organizations. John Wiley and Sons, New
York.

Mundel, M. E., 1976. Measures of productivity. Industrial Engineering,

Vol. 8, No. 5, pp. 24–26.

OEEC, 1950. Terminology of Productivity. OEEC, 2,2 rue Andre-Pascal,

Paris 16.

Quality Magazine, 1981. Quality, a Management Gambit, June.

Siegel, I. H. Measurement of Company Productivity in Improving

Productivity Through Industry and Company Measurement. National
Center for Productivity and Quality of Working Life, Series 2, U.S.
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Siegel, I. H, 1980. Company Productivity: Measurement for Improvement.

The E. Upjohn Institute for Employment Research, Kalamazoo, Michigan.

Stewart, W. T., 1978. A yardstick for measuring productivity. Industrial

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for manufacturing companies. Doctoral dissertation, Illinois Institute of
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Page 27
Chapter 2
Productivity and Total Quality Management Challenges,
Opportunities, and Scope of Activities

This chapter discusses manifestations of the productivity and quality

problem in the modern business environment. The key productivity and
quality management challenges are discussed, and there is a
presentation of the components of the comprehensive productivity and
quality management model.

2.1 THE PRODUCTIVITY AND QUALITY PROBLEM

Although several factors contribute to the economic decline and the

consequent standard of living, there seems to be general agreement that
the productivity level and growth rate and the quality of goods and
services can have a major impact on the national economy. For example,
during the first half of this century, the United States maintained
productivity leadership in the world with a fourfold labor productivity
increase. However, since World War II, productivity growth in the United
States has declined considerably.
Page 28

Figure 2.1 Average annual labor productivity growth in the United States
private business sector, 1889–1980. (Source: Rahn et al., 1981)

The data complied by Kendrick (1965) and Bowen (1979) reveal an

awesome decline in the annual productivity growth rate in the U.S.
private business sector: from 3.2% in 1947–1966, to 2.1% in 1966–1973
and 0.8% in 1973–1979. As shown in Figure 2.1, Rahn also presented a
similar trend of labor productivity growth in the United States business
sector from 1889–1980. The most recent projection by Kendrick (1984)
shows a moderate increase of about 2.5% between 1984 and 1986.

Between January 1985 and August 1992, major corporations cut back
the number of workers to reduce their losses and to stay in business.
Table 2.1 presents cutback statistics from some of the major
corporations. Laying off workers is not the answer to productivity and
quality problems. The answer lies in an ongoing improvement process
that ultimately requires integration of all the elements of the work
organization to achieve the elimination of waste, reduction of cost, and
defect-free product through implementation of better techniques and
working conditions. Although the productivity and quality problem in the
United States may be unique to its economic climate, a careful look at
other countries will reveal that similar problems and trends exist in other
countries as well. Kendrick (1984)
Page 29

Table 2.1 Cutbacks in Major Corporations Between January 1985 and August
1986

Company # of Employees % of Work Force

Apple 5,200 20
ARCO 6,000 18
AT&T 80,000 10
CBS 1,175 14
Cessna 1,000 21
Combustion Eng. 7,300 20
Dupont 12,000 11
Kodak 13,700 10
Exxon 6,900 17
General Electric 29,000 8
General Motors 74,000
Greyhound 3,000 21
Intel 2,600 10
IBM 100,000
Polaroid 750 5
Union Carbide 8,000 8
Wang 3,200 10

presented a productivity comparison between the United States and the

rest of the world. Although the quality of goods and services has received
unprecedented attention in recent years, expert opinions indicate there is
a lot to be done in improving quality in all industrial sectors. Juran (1981)
presented his perception of the relative quality of goods and services
produced by the West and those produced by Japan. As shown in Figure
2.2, Japan is shown to have a leading edge in quality. In 1980, the
American Society for Quality Control conducted a survey using 10,000
questionnaires to determine the opinions of the heads of household on
the quality of the goods and services produced in the United States. The
response rate to the questionnaire was 71%. The results of this survey
are shown in Figure 2.3. The results of this survey indicate that quality
deserves significant attention in all industrial sectors. Holusha (1984)
stated that the quality issue has major implications for the health of the
domestic (automobile) industry, which reported a combined loss of more
than $4 billion in 1980 and laid off more than 200,000 workers.
Page 30

Figure 2.2 Relative product quality comparison between Japan and the
West. Source: Juran, 1981, p.16

Figure 2.3 Quality ratings of U.S. products.

Page 31

Figure 2.4 Average life cycle trend of a typical technology. (Source:

Edosomwan, 1986e)

2.2 PRODUCTIVITY AND QUALITY MANAGEMENT

CHALLENGES

Edosomwan (1986e) stated that as the current explosion of technology

continues, organizations will be faced with the following productivity and
quality management challenges:

Managing the Dynamic Change in Technology Life Cycle to Improve

Productivity and Quality
As shown in Figure 2.4, the various types of technology used to improve
productivity and quality in the early 1960s had an average life cycle of ten
years. From the producer, supplier, and consumer perspective, the ten-
year life span for a typical technology was still short before new
technologies were introduced into the work environment. By 1986, most
technology life cycles have shortened to about two years and are
projected to be six months by the year 2000. This continually shortening
life cycle poses a real
Page 32

challenge for all organizations that desire to use technology as a

mechanism for productivity and quality improvement. It requires that the
change from one product type to another will be done at a much faster
pace. Product model development, specification monitoring, prototype
testing, product manufacturability and serviceability, and process
qualification and improvement will have to be performed within a short
time. Just-in-time productivity and quality improvement will require new
techniques and tools for managing the dynamic change of the input and
output elements in the work environment. It also requires a very close
working relationship between the supplier, producer, and consumer of the
goods and services.

Emphasis on Quality at the Source of Production and Service

For several decades, the emphasis has always been on inspecting
quality into a product and service. As a result, almost every process
within the work organization has an inspection station. In addition to
adding to the cycle time of a product or service, inspection stations add
operations that also create additional rework, which in turn increases the
cost of production or service. By the year 2000, the shortened life cycle of
technologies will not allow enough time for work-in-process inspections or
inspections after each process. Quality will be needed at the source of
production. All the mechanisms needed for a transformation process
must perform correctly the first time with high reliability.

Technical Vitality Requirements for Productivity and Quality

Management
The complexity of the production and service processes will increase with
increasingly sophisticated automation. The new technologies will require
high-level skills for design, implementation, and maintenance. The
productivity and quality management will require advanced
interdisciplinary knowledge, with strong demand skills that will act as a
systems integrator (SI).

Motivating Workers to Increase Productivity and Improve Quality in

the Work Environment
Although several motivational techniques exist today, the effectiveness of
the existing techniques may not be adequate in this era of technological
explosion. New motivational techniques that address the changing values
Page 33

Figure 2.5 A typical process layout.

and role of workers will always be needed. More emphasis will have to be
placed on task enlargement, task evaluation, psychological evaluation,
morale management in real time, and other physiological needs of
workers.

Assessing and Measuring the Impact of technology on Productivity

and Quality
The rate of return on investment (ROI) and the net present value (NPV)
method have been the most widely used approaches for justifying the
productivity of new technologies. Defects per unit produced has also
been used to justify the quality of new technologies. In the era of
expanded technology, the highly capital-intensive work environment
requires a comprehensive approach for justifying the productivity and
quality of new technologies before and after their introduction into the
work environment. Such a comprehensive approach must consider the
total cost of doing business. In Chapter 4 a total productivity
measurement model is presented. This model is useful for justifying new
technologies.
Page 34

Figure 2.6 A typical process layout work flow pattern.

Managing the Impact of Group Technology Application

As shown in Figures 2.5 and 2.6, the layout of machines and tools is
traditionally scattered and specialized. In recent years, some
organizations have realized benefits in productivity and quality
improvements through group technology (GT) applications. However, the
group technology layout shown in Figure 2.7 requires ongoing process
control and monitoring. It is a challenge to balance the parameters and
variables among processes, work cells, and machines. As GT
applications receive more emphasis, appropriate productivity and quality
management techniques are needed.

Planning and Analysis of Production and Service Variables

To properly manage productivity and quality in a dynamic technology
oriented work environment, the input and output components and the
Page 35

Figure 2.7 A typical group technology layout and work flow pattern.

factors affecting them must be carefully planned. The total cost of doing
business must be analyzed periodically to continue to minimize product
or service cost overruns. Emphasis should be placed on using
comprehensive productivity and quality planning techniques in both
manufacturing and service organizations.

Managing the Loop Between the Supplier, Producer, and Consumer

Dynamic change in work processes and the technology life cycle brings
about a shorter response time for all production and service
requirements. Real time management of productivity and quality requires
the elimination of excessive transportation, repetition of tasks, and delays
between the supplier, producer, and consumer. The network of
information that is the supplier, producer, and consumer loop must be
achieved by the year 2000.
Page 36

Cost minimization criteria, service turnaround time, error-free product,

and service guarantee must be applied to vendor selection. For each
process, material and other requirements must be delivered in time to
facilitate real time productivity and quality improvement.

Ongoing Search for Productivity and Quality Management

Techniques and Methodologies
The need exists for additional techniques and methodologies for
improving, monitoring, planning, analyzing, measuring, and evaluating
productivity and quality in a sophisticated high-technology work
environment. Useful techniques for productivity and quality improvement
are developed as the work organization changes.

Managing the Changing Values and Composition of the Work Force

As more attention is given to productivity and quality improvement
through technological development and implementation, the values of the
workers are bound to change with the new technology. How the quality of
working life affects productivity and quality improvement will have to be
addressed. New, flexible working conditions may have to be adopted to
accommodate the changing values of men and women in a
technologically advanced society. Technological advancement
increasingly makes it possible for many to work at home. However,
unless on-line process control linkages are developed for the
sophisticated information network, system downtime is bound to have a
significant negative impact on the productivity and quality of goods and
services.

Effective Organization Structure for Productivity and Quality

Management
The hierarchical organization is the most widespread in the business
environment. Hierarchical organizations have stability in their favor. They
provide efficient mechanisms for coordinating large numbers of people
through simultaneous central direction and specialization. However, the
multilayers of management within the hierarchical structure can
sometimes be an impediment to the quick resolution of problems within a
work organization. The bureaucratic delays and bottlenecks created by
the various multilayers of management are not adequate for an
environment
Page 37

with a dynamic need for productivity and quality improvement. By the

year 2000, a typical economic entity will experience dynamic change and
disturbance primarily driven from the shortened technology life cycle. To
quickly respond to productivity and quality management, an alternative
organizational structure that utilizes fewer levels of management layers
will be sought. The new form of organizational structure may be viewed
as a flattened hierarchical structure with minimal levels of management.
The main benefit to be derived from such a structure is a quick response
rate to people, productivity, and quality issues. It will facilitate clarity and
economies of scale, direct the vision of individuals and managerial units
toward performance, and improve the day-to-day decision-making
process.

Better Coordination of the Productivity and Quality Management

Hierarchy
For our tools and techniques to improve productivity and quality, the state
or level of application within the productivity and quality management
hierarchy (PQMH), specified in Chapter 1, must be carefully understood.
The coordination of activities between each level of the PQMH requires
the total involvement of everyone in the prescribed work environment.
Figure 2.8 illustrates the total teamwork involvement in the productivity
and quality management process.

Figure 2.8 Total teamwork involvement in the productivity and quality

management processes.
Page 38

Figure 2.9 Components of the CPQM model.

Page 39

2.3 COMPONENTS OF THE COMPREHENSIVE

PRODUCTIVITY AND QUALITY MANAGEMENT (CPQM)
MODEL

The comprehensive productivity and quality management model

components shown in Figure 2.9 encompass a management information
system and a feedback mechanism that provide the necessary
information about production or service process characteristics and
variables, process performance through measurement, action on the
process inputs, the transformation process, and action on the output. To
improve productivity and quality, all production and service parameters
must be characterized with complete understanding of repeatability and
variability. There must be a system for real time measurement, control,
evaluation, planning, and improvement. Correction of problems and
defect removal should be done through system-aided root cause
analysis. To avoid excessive inventory problems, the system control and
balancing should be used to ensure that the rate of production or
services is equivalent to the rate of consumption. However, the balancing
acts should be done with the awareness of fallout rates from the input
process, transformation process, and output management process.

2.4 WHAT ARE TOTAL QUALITY MANAGEMENT AND

CONTINUOUS IMPROVEMENT OF WORK PROCESSES?

Total Quality Management (TQM) is an evolving competitive strategy for

continuous improvement of products, processes and services to enhance
quality, reduce cost, improve productivity and total customer satisfaction.
TQM involves the quantitative, non-quantitative, behavioral, management
statistics, economics, and systems engineering tools and methods to
control, all production and service processes of an enterprise in order to
satisfy customer needs and requirements. It is based on the principle that
from continuous quality improvement stems increase productivity, lower
cost, stronger competitive position, increase in market share and
profitability. As shown in Figure 2.10, TQM involves several elements
including management participation and development, employee
involvement and the use of action teams, supplier certification and
training, education aid training for the work force, emphasis on total
customer satisfaction, partnership between suppliers, process owners
and customers, use of appropriate recognition and reward system and
ongoing focus on use of problem solving tools to improve performance,
quality and productivity.

Page 40

TQM demands commitment and discipline. It relies on people, involves

everyone and requires participative management approach. It achieves
continuous improvement through focus on the processes that create
products and services. The products and services are key indicators of
the effectiveness of their processes. Continuous process improvement is
the TQM hallmark. Commitment from top management and the work
force is required for successful implementation. Such commitment should
include: providing resources to support improvement projects, ongoing
focus on cost reduction, customer satisfaction, and ongoing education
and training of the work force. TQM practices are based on consistent
pro-improvement goals and objectives that are geared for every aspect of
the enterprise. It also focuses on improving supplier’s capabilities through
education and technical assistance, more creative ways for improving
supplier’s processes. Another requirement for success is communication.
Cross-functional unfettered vertical and horizontal communication is
recommended. TQM practices aim at removing communication barriers,
processing bottlenecks between management and the work force, and
between operational work units. In order to effectively grasp the concepts
of TQM the essential tools, techniques and skills must be learned and
institutionalized at all levels of

Figure 2.10 TQM elements.

Page 41

the enterprise. Workers and management must be taught planning and

goal setting techniques to analyze customer and supplier needs,
expectations and feedback. TQM employs the best available
management practices, technologies, tools and techniques to satisfy the
needs of the customer. It creates teamwork and constructive working
relationships that recognize people as the greatest asset and their talents
as the key driver to an enterprise success. It involves every individual in
improving all work processes and builds and sustains a culture
committed to continuous process improvement.

Continuous improvement is a TQM hallmark. Continuous improvement is

the act of constantly and forever enhancing value and excellence. The
philosophy of continuous improvement leads enterprises, teams and
individuals to constantly attack and improve outdated processes,
procedures, technologies, systems and work habits, to reduce waste and
to focus on error prevention and defect elimination. The continuous
improvement process consists of groups of activities that complement
each other and provide the support structure and environment for
improving performance and achieving the highest levels of quality and
competitiveness. Improvements may be of several types, including:
quality of incoming materials, responsiveness to internal and external
customers, cycle time reduction, reducing errors and defects at the
source of production or service, enhancing value of the customer through
improved product and service attributes, and improving efficiency and
effectiveness in the use of all resources. Adopting the philosophy of
continuous improvement means one is not satisfied with the status quo or
content with getting by with old and current methods of performing work.

It requires continual efforts in seeking ways and means of getting better.

The process of continuous improvement demands regular cycles of
planning, measurement, evaluation and improvement. The improvement
process must have quantitative and qualitative approaches for assessing
progress and for implementing future improvements. It also should have
key elements that help work teams, and individuals to accept change and
make continuous improvement a necessary way of life. Continuous
improvement should not be referred to as a new buzz word or new fad. It
is a total way of thinking, planning, working and striving for excellence in
everything we do. The continuous improvement journey involves a race
with no finish line. It is a journey that is both demanding and satisfying:
demanding because it is an ongoing one; satisfying because as the
journey continues, innovative ways are employed to enhance skills,
processes, procedures and technologies that help to improve work
processes. It also requires a long-term commitment from the entire staff
of the
Page 42

enterprise, for it takes time to change the personality of an enterprise

from an attitude of reaction to one of prevention.

2.5 WHY FOCUS ON TOTAL QUALITY MANAGEMENT AND

CONTINUOUS IMPROVEMENT OF WORK PROCESSES?

Enterprises worldwide are experiencing a customer-driven competition.

The availability of high quality, low cost products and services to compete
for a share of the market has stimulated a search for new business
strategy. The continuous improvement philosophy is the right strategy for
achieving excellence in product and service quality, productivity and
performance, organizational effectiveness and total customer
satisfaction. Short-term financial success or profitability is no longer good
enough for an enterprise operating in a competitive world economy.
Achieving long-term success through continuous improvement of work
process is the right strategy. Continuous improvement is driven not only
by the objective of long-term

Figure 2.11 Various barriers that impede ongoing TQM efforts (Source:
GAO Report #GGD-93-9BR)

Page 43

profitability and growth, it is also driven by the need to be responsive to

the competitive pressures in the market place. The response should
focus on superior quality and competitive price. An enterprise can
achieve the following benefits through TQM and continuous
improvement:

The focus on TQM and continuous improvement also enables an

enterprise to understand and satisfy ever changing customer
requirements through better processes that provide excellent goods and
services. It also enables an enterprise to stay ahead of the competition
through continual promotion of innovative ideas for better products,
services and technologies. The improvement process also helps an
enterprise to continually benchmark products and services against that of
the competition. Regular cycles of improvement strategies are then
developed and implemented to stay ahead of the competition.

Continuous improvement of work processes has been proven to improve

market share, reduce cost, improve effectiveness and enhance total
customer satisfaction. Surviving, competing and winning in a competitive
world economy requires focus on a never-ending improvement process.
The enterprise, team or individual that believes the quality challenge that
lies ahead, in many respects, is greater than any it has faced to date, will
adopt the philosophy of continuous improvement.

2.6 WHO IS INVOLVED IN THE TOTAL QUALITY

MANAGEMENT AND CONTINUOUS IMPROVEMENT
EFFORT?

Every function, every individual, suppliers and customers, managers,

supervisors, employees and unions should focus on TQM and continuous
improvement of all work processes to improve quality, productivity and
overall enterprise effectiveness. Teamwork between individuals and
functional areas of the enterprise must be encouraged. Partnership
between suppliers, process owners and customers is required to embark
on a successful TQM and continuous improvement journey.
2.7 BARRIERS AND BENEFITS OF TOTAL QUALITY
MANAGEMENT

The General Accounting Office (GAO) performed a study in 1992

involving several federal agencies. The study identified various barriers
shown
Page 44

in Figure 2.11 that impede ongoing TQM efforts. Many of the barriers
identified were related to employee issues such as:

1. Employees don’t believe they are empowered to make changes,

2. Employees lack sufficient information on how to use TQM tools
and
3. Employees lack information and training on TQM concepts and
theory.

GAO also examined the benefits of TQM in these two ways:

1. Effect on external customers as reflected by overall organizational

performance and
2. Effect on internal customers as reflected by internal conditions.

Figure 2.12 Impact of TQM on performance, (Source: GAO Report

#GGD-93-9BR)
Page 45
Page 46

Figure 2.13 Ten essential steps for implementing TQM and the
continuous improvement philosophy.
Page 47

As shown in Figure 2.12 and Table 2.2 most installations report positive
impact on performance.

2.8 HOW TO IMPLEMENT THE TOTAL QUALITY

MANAGEMENT CONCEPT AND CONTINUOUS
IMPROVEMENT PHILOSOPHY

The keys to effective implementation of the TQM and continuous

improvement philosophy are captured in the elements presented in
Figure 2.13. Each essential element of implementation will now be
discussed.

Figure 2.14 Eight key focal points of top management commitment and
support for continuous improvement.
Page 48

2.8.1 Top Management Commitment And Participation

Top management’s sincere commitment, support and leadership in
continuous improvement efforts is a key requirement for success. This
active participative support and commitment should focus on the eight
success factors summarized in Figure 2.14. Top management should
recognize the business environment they are in to provide clear goals
and objectives for guiding the enterprise team continuous improvement
efforts. Top management must make a physical, mental and philosophical
commitment to quality and total customer satisfaction if there is to be a
total or comprehensive quality and customer satisfaction initiative. This
type of commitment is generally driven by an awareness and acceptance
of the need for change. If there is no strong commitment from top
management, priorities will shift before real results can be achieved.

Evidence of commitment is shown through on-going support for quality

and customer satisfaction improvement projects. Top management must
monitor, encourage and reward those that are actively improving
products and processes. Commitment also involves committing
resources to correcting common causes in the system that are
responsible for poor quality. When long-standing, systemic issues are
identified and require resources to be redirected for resolution,
management must respond. It is also important that specific goals and
objectives be set to direct employee efforts. Employees must understand
how their efforts support the company’s strategic plan and must be held
accountable for making a contribution.

Top management must also be committed to the utilization of statistics,

measurement techniques, and data collection to control variability in
human, mechanized and automated performance. This represents a
philosophical commitment that is key to success. The top management
team must continue to grow, develop and change as the culture changes.
The growth involves studying, understanding, and positively directing
human behavior toward excellent performance. The responsibility for
managing the economics surrounding the business remains with top
management. Costs and prices must be kept at levels that allow
affordable products and services to be delivered while the company
remains profitable.

Two key elements that must be continually reinforced and demonstrated

by top management is a commitment to minimizing delay time, idle time,
wasted time, lost time, and all other significant aspects of time, and to
utilizing the methods, procedures and processes required to ensure that
the products and services rendered are of exceptional quality.

Page 49

Finally, top management must be committed to empowering employees.

This involves authorizing employees to take corrective action for
prevention of errors, defects, and delays at every level of the
organization. The following steps should be taken to ensure the
involvement of top management in TQM and continuous improvement
efforts:

Step 1: Train top management on continuous improvement tools and

techniques, managing change, creating a total quality culture. Involve top
managers in continuous improvement training for middle managers,
supervisors and other professionals.

Step 2: Make continuous quality, productivity and total customer

satisfaction improvement the chief executive officer’s personal mission.
Encourage top executive participation in the enterprise continuous
improvement steering committee to oversee continuous improvement
project plans, allocate resources and monitor progress.

Step 3: Require annual continuous improvement plans from line

executives and managers. Such plans should depict a blueprint for
comprehensive implementation of specific improvement projects. The
plan should include specifics on training requirements, customer
satisfaction improvement, supplier management, information analysis,
process control and data management, employee job satisfaction and
human resource issues, benchmarking of competitors, and cost-of-quality
estimate for each business unit.

Step 4: Include discussions about TQM and continuous improvement

projects in all staff meetings. Top managers should participate in
continuous improvement projects, recognition events for quality
excellence, and the enterprise suggestion program for continuous
improvement.

Step 5: Put executives and top managers in touch with outside

customers, suppliers and professional organizations. An executive will
have a greater appreciation of the requirements, needs and problems of
customers and suppliers if one-on-one contact is made. Such contact
also provides a unique opportunity for the executive to share and
exchange ideas on continuous improvement goals, objectives and on
specific projects. The outside contact with professional organizations also
provides positive exposure for the enterprise and professional validation
of new ideas.

The TQM and continuous improvement philosophy must be an integral

part of top management vision, practice and personal mission.
Organizations
Page 50

that have a top management zealot who possesses leadership ability,

vision and motivational qualities are bound to succeed. Excellent support
from top executives and senior managers also ensures the availability of
resources, employee motivation and rewards required to sustain
continuous improvements at all levels of the enterprise.

2.8.2 Current Business Environment Assessment

The current business environment is assessed to determine areas of
strength and weakness so that a strategy for continuous improvement
implementation can be developed. The assessment of the operational
environment serves as an educational step for the top management team
and the improvement teams by defining the current state. The
assessment provides a baseline on product, process and information
quality and human resource utilization. One of the important elements of
success is the total understanding of supplier and customer
requirements. The supplier plays a key role in determining the quality of
inputs. The customer is the final judge of the quality and competitiveness
of the goods and services. The goal is to find methods of identifying the
supplier requirements and identifying customer needs, wants and desires
and translating them into product and service requirements. Those who
create the output and those who receive it should agree on clear,
measurable goals for the work. In order to capture the requirements of
the suppliers and the customer in products and services, producers of
products and services must begin to listen extensively to the voice of the
customer.

This begins with obtaining marketing information and customer

perception data on existing and competing products and services. This
data collection provides the baseline required to develop a clear
understanding of customer demands, and data must be collected on an
on-going basis. The next step is to break down the product and service
system into part or process characteristics and determine qualitative and
quantitative issues and target values for the defined characteristics.
These values must then be compared to the customer baseline data. In
order to compare the customer data to product data, customer
requirements and characteristics must be specified in like terms.
Customer requirements and market information must be analyzed and
the data synthesized for relevance. Interrelationships between
characteristics should be considered at this time. Once this critical
analysis is complete, the final step is to fully define product and service
characteristics and technical measurements that meet customer
requirements.

Page 51

The assessment of the business environment must be done continuously.

This requires on-going partnership with suppliers and customers. Such a
partnership provides the basis for total understanding of market
requirements, needs and wants. The following suggestions are
recommended for enhancing partnership between supplier, process
owner and customer: (1) Maintain on-going communication with
customers and suppliers. This requires one-on-one contact, an on-line
communication channel, telephone contact and periodic site visits. Also,
perform periodic surveys to access the degree of customer satisfaction
and use the survey as a feedback mechanism for understanding areas
for improvement. Provide feedback to customers on improvements
achieved in the product and service offerings. (2) Encourage customer
participation in developing quality excellence strategies for new products
and services.

Encourage suppliers to participate in implementing a quality excellence

and total customer satisfaction program. This can be very useful in
situations where the suppliers commodities are essential to the products
and services delivered.

The assessment of the current business environment must be

comprehensive. It should provide a baseline on product, process and
information quality and human resource utilization. The major areas to
focus on are: Leadership and Culture—The senior management’s
success in creating quality values and in building the values into the
company’s operation philosophy.

Quality of Information Utilization and Analysis—The effectiveness of the

company’s collection and analysis of quality improvement and planning.

Strategic Quality Planning—The effectiveness of the company’s

integration of the customer’s quality requirements into its business plan.

Human Resource Utilization—The success of the company’s efforts to

realize the full potential of the work force for quality management.
Quality Assurance Results—The effectiveness of the company’s systems
for assuring quality control of all its operations and in integrating control
with continuous quality improvement. The demonstration of quality
excellence is based upon quantitative measures and results.

Customer Satisfaction—The effectiveness of a company’s utilization and

integration of new technology into new and mature products and
processes.

Page 52

Innovation Process Management—The ability and commitment of a

company to encourage and manage innovation at all levels of the
organization.

Supplier Management—The successes of the company’s efforts to

encourage and develop a supplier network that utilizes effective quality
assurance and management techniques and controls.

A review of the above areas provides the basis for understanding the
enterprise’s quality culture, its technical systems, the management
philosophy, its products and services, and its ability and commitment to
meeting customer requirements. The outcome of the organizational
assessment should be an aggregated analysis of a series of surveys,
interviews, and data collection efforts. It should conclude with prioritized
recommendations to target the improvement strategy.

2.8.3 Blueprint for TQM and Continuous Improvement

The development of the enterprise’s improvement strategy should be
done with the knowledge gained from the current business environment
assessment discussed in Section 2.8.2. A TQM and continuous
improvement steering council consisting of a group of senior managers
and/or their representatives should be used to develop a blueprint for
TQM and continuous improvement. The TQM and continuous
improvement steering council serves as the process improvement
designer and catalyst for preparing the enterprise for change and
providing specific coals and objectives for improvement. The council also
participates in directing the implementation of the continuous
improvement projects.

The development of an effective strategy that will direct the entire

implementation will require vision and breakthrough thinking on the part
of top management. Breakthrough thinking will occur through an effective
orientation and education plan for top management on the concepts of
Total Quality Management and Continuous Improvement. The team
should then develop a mission statement and strategic goals with input
from employees, customers and suppliers. These goals will be used
along with the results of the stage one assessment to develop a phased
improvement strategy. The strategy must then be shared with all
employees. This stage may take six months to two years. During that
time, it is important to keep employees aware of activities and motivated
toward change. This stage is probably the most important of all.
Developing a clear direction, focus and the collaborative involvement of
the top management team are the keys to the success.

Page 53

The blueprint must encompass a long-range strategy for continuous

improvement in quality productivity, and total customer satisfaction that
covers a minimum of four product cycles or twelve years, whichever is
longer. The enterprise management team and non-managers must
understand the blueprint to the point that they can develop, at the various
operational levels, short-range plans (one to four years) to ensure that
their operational activities support the long-range strategy.

These short-range continuous improvement plans should be included in

the annual business plan and each operational unit should be measured
throughout the year on how well it is meeting these commitments. The
measures used at the operational unit levels should include, but not be
limited to, the following: quality, productivity, customer satisfaction
indices, costs, delivery times and schedules, savings per employee,
resource improvement ratios and growth in market share. The
enterprise’s continuous improvement goals and objectives should be
concise, clear and can be presented in a manner for everyone to
understand. Some companies have been able to put their goals and
objectives on a small index card that is easy for all employees to
understand and remember.

2.8.4 Continuous Improvement Goals And Objectives

It should be recognized that it takes time to involve everyone in the
continuous improvement effort. Total quality and productivity
improvement cannot be achieved overnight. The implementation of the
continuous improvement goals and objectives requires total participation
and involvement of the work force. The ability of managers and
supervisors to sell the blueprint and the need for continuous improvement
is critical. When the management team is involved through hands-on
day-to-day participation, employee involvement is easy to obtain. When
employees see upper and middle management involvement, participation
in, and dedication to continuous improvement efforts, they will support
and participate in them as well.

The selling of the TQM and continuous improvement goals and

objectives to everyone should also focus on why this is needed, the
resources to support improvement projects, assurance of fair reward and
recognition for everyone, and the overall benefits for the enterprise. In
order to achieve total participation, barriers to communications, both
laterally and vertically must be removed. Total involvement of everyone
by providing opportunities to participate in continuous improvement
projects is essential to eliminating communications barriers. The TQM
and continuous improvement projects focus at the first line department
level should also provide a forum for sharing of knowledge among team
members.

Page 54

Another method for encouraging employee participation is through the

continuous improvement suggestion program. This provides a means for
each individual to contribute their ideas to the success of the overall
goals and objectives established at the enterprise level. Such a
suggestion program must also have in place measures for success and
mechanisms for recognizing individual contributions to improvement.

2.8.5 Education and Training Needs

Figure 2.15 shows recommended training profiles for enterprises. The
assessment of education and training needs should be comprehensive in
approach and is a key element of the overall improvement strategy. The
assessment should include reviewing the requirements for new hires,
formal and on-the-job training approaches, and career enhancement
opportunities. Interviews should be conducted with employees, including
managers, to determine the effectiveness of current training programs
and to define training needs associated with Total Quality Management,
process understanding, technical tools, leadership development, and
participative management. Current training programs should be audited
for content and relevance. The recommendations that follow the
assessment must include in-house and external training opportunities
focused on the continual development of all levels of employees.

Figure 2.15 Recommended continuous improvement training profile for

enterprises.

Page 55

Once the education and training needs have been identified, all
employees should be trained on the required continuous improvement
tools and techniques. While training requirements may vary at the
operational and individual levels, it is essential for everyone to make
short-term and long-term contributions to the continuous improvement
efforts. The training sets the stage for awareness required for cultural
change. It also provides required skills and knowledge to address specific
problems. The training effort should be extended to suppliers and
customers with the framework of business relationships. The key
objective of the enterprise’s education and training program is to provide
all the requirements for the employees to effectively contribute to the
continuous improvement process. The following approaches are
recommended for implementing education and training needs.

STRATEGIC: The annual business plan which encompasses the annual

quality plan for all levels of the enterprise should be used for the
development of specific types of training for employees to support the
continuous improvement initiatives.

UNIVERSAL: The continuous improvement steering committee

determines specific required on-going training for all employees so they
will be active participants in the continuous improvement process.

CUSTOMIZED: The management team examines unique or specific

needs, and then provides customized training utilizing internal or external
resources based on the individual situation.

INDIVIDUAL: Through programs for encouraging active employee

participation, all employees review their development needs and, in
concert with their manager, define and implement individual education
and training needs.

FOCUS TRAINING PROCESSES AND AIDS: Most enterprises train the

trainers to reduce the over cost of training. Some use supervisors to do
the training. The training process should emphasize a diversified program
of courses for all employees. Examples of suggested areas are specified
in Figure 2.15. Tuition aid for college course work is also recommended
for encouraging continuous management and employee development.

2.8.6 TQM and Continuous Improvement Projects

The development of specific TQM and continuous improvement projects
by operational unit is done with the knowledge gained for the assessment
Page 56

Figure 2.16 Steps to form and operate a continuous improvement team

and the roles and responsibilities of team members.
Page 57

of the current business environment. Individuals or operational units can

also bring forward through the suggestion program specific projects on
which to focus. The collaboration and cooperation among functional
areas is the key to the success of this step. Improvement projects
identified by operational units and individuals should be prioritized
according to merit for breakthrough in savings, cost reduction, defect
elimination and overall enterprise effectiveness. The availability of
resources should also be considered when selecting the improvement
projects. All improvement ideas should be reviewed carefully because
failure to implement a sample could lead to losing substantial savings in
resources, time and quality improvement. Those that contributed to the
improvement ideas should help in the prioritization and final selections.

2.8.7 Continuous Improvement Teams

As shown in Figure 2.16, the TQM and continuous improvement team
consists of individuals representing each operational unit involved in the
process. The team works across functional boundaries. The group meets
regularly to identify, analyze and resolve specific problems to improve
quality, productivity and total customer satisfaction. A successful
continuous improvement team must have the following characteristics: (
1) use participative approach to goals, objectives and vision setting, (2)
open sharing of ideas, ( 3) open communication among team members,
(4) team reward and recognition. The roles and responsibilities of the
improvement facilitator, team leader and team members are described in
Figure 2.16. It is important to point out that the implementation of
continuous improvement projects occurs over time. It involves continuous
assessment of progress, accepting the evolution of innovative new
approaches, and rescoping and correcting to ensure progress toward
objectives. It is recommended that a continuous improvement steering
council be formed to monitor and guide project implementation.

The council can be involved in determining requirements for tailored

orientation and education for all employees, assisting with the
development of organized employee action teams, and recommending
reorganization when appropriate. Their on-going responsibility is to assist
with assessment, update and revision of the continuous improvement
strategy as required. The following guidelines are provided to help
continuous improvement teams.

Goal Setting
The members of the continuous improvement team should work together
to have clearly defined goals and objectives. The mission of each
individual
Page 58

team should be defined without ambiguity. Each team member should be

encouraged to create and focus on the right vision of the improved
process and operational unit. The goal is that no level of defect is
acceptable. The team improvement focus should be on every task,
process, procedure, and policy for each operational unit. In setting the
goals for improvement, the participative approach should be used. The
team should allow for productivity and quality goals that are measurable,
attainable and open to opportunity. The improvement goals should be
prioritized with measures in place for monitoring progress. A team
consensus on the goals should be obtained and the goals then
implemented.

Problem Analysis and Resolution

The goal of the continuous improvement team is to resolve new
problems, and initiate and implement improvement strategies that focus
on error prevention and defect elimination. The problem analysis and
resolution should happen at the source. The focus should be correcting
process flaws through analysis of task parameters, inputs, process and
outputs. The use of simple and effective tools for problem solving should
be encouraged. The right tools and techniques are usually acquired
through continuous education and training, cross training and on-the-job
training. The team members should be encouraged to train each other on
new methods and techniques and cross-train for multiple skills.
Management support in providing the required information tools and
techniques to do the job right is crucial. Such support should include
providing all financial and technical resources required for successful
completion of the project. One of the keys to successful problem analysis
and resolution is the establishment of the work
Figure 2.17 Four step approach to successful CI team meetings.

Page 59

plans for each improvement project. The plan should cover schedule,
cost, expedite savings, resource requirements, short-term and long-term
focus. A focus point for coordinating all improvement activities should be
established.

Teamwork and Communication Channels

On-going enhancement of the communication channels should be
provided to team members at all levels. Teamwork within operational
work unit and across functional boundaries should be encouraged. To
avoid confusion among team members, the roles and responsibilities for
each team member should be clearly defined at the operational and task
levels. Support systems that facilitate decision making and problem
solving at the source should be provided. Figure 2.17 presents a four
step process for successful continuous improvement team meetings. The
team must communicate effectively and regularly. Whenever a team
meeting is held, the purpose and objective of the meeting should be
defined and the specific agenda and time duration provided. The meeting
should start on time and the minutes recorded. The closure should
summarize the key accomplishments, follow-up items and positive
acknowledgment of the team contribution to the success of the meeting.

Team Recognition and Reward

Team members can recognize themselves by acknowledging the
contributions of others to the success of the improvement projects. In
addition, management plays a critical role in this area. The managers and
supervisors should provide feedback mechanisms for information among
people, processes and procedures, provide real-time recognition for a job
well done, and share the gains from productivity and quality improvement
among participating team members. Also, people can be motivated
through additional responsibilities, a simple thank you for a job well done,
and by providing meaningful job content, autonomy, and training to
perform their duties. When given, rewards should be provided in a timely
manner.

The implementation stage will require patience, risk taking, and

investment in training, process improvement, technology, and
professional third party assistance. This methodology results in a
continuously improving organization with processes in place to manage
quality and productivity as required. The resulting payback is high quality
products and services, and satisfied customers which translate to bottom
line profits.
Page 60

2.8.8 Auditing Results and Benchmarking Processes for

Continuous Improvement
Once specific improvement projects have been implemented, the next
step is to audit results and follow up on open issues. The actual results
obtained should be compared with the specific goal and anticipated
performance. All discrepancies should be identified and feedback
provided to the continuous improvement team members for follow-up.
One of the major difficulties experienced by most individuals and
enterprises is how to measure the success of the continuous
improvement efforts.

In order to audit results properly, a mechanism for information among

people, processes and procedures should be established. A
management information system should be implemented. This system
should incorporate a database on productivity and quality trends, issues
and key accomplishments. The data should be available to analysts and
the continuous improvement team members working on the improvement
of all key processes. The results obtained from the implementation of
continuous improvement projects should be benchmarked against that of
competitors.

Benchmarking efforts entail the search for industry best practices that
lead to superior performance. It involves comparing all activities being
done, all results being obtained, all forms of strategic planning, means
and processes for doing work against that of the competitors. Benching
enables an enterprise to identify strengths and weaknesses compared to
industry best practices, and learn more efficient techniques and tools and
implement them to stay ahead of the competition. Good benchmarking
analysis produces two types of information: quantitative data that are
used to measure performance by and to set future targets, and qualitative
information on the key success factors that explain how other enterprises
became best-in-class in that function. The enterprise management team
may elect to have outside consultants do benchmarking or to have an
internal continuous improvement team perform it. The following six step
approach is recommended for performing benchmarking:
Step 1: Identify the continuous improvement functions or categories
(management, technology, quality, productivity, process steps, cost,
delivery and schedule, strategic planning, customer satisfaction indices,
supplier process and information system). Also identify the companies
that are best-in-class in the selected areas for benchmarking. This may
require national and international competitive analysis depending on the
type, size, products and services offered by the enterprise.
Page 61

Step 2: Identify and collect data on key performance measures. Review

industry trends and select key measures that can be compared with other
enterprises. Collect data on key measures. In addition to collecting data,
describe key management approaches that differ between enterprises
and identify the key success factors.

Step 3: Project future performance levels of the benchmarked enterprise.

In this step, projections on what the enterprise’s performance level will be
over the short-term (two years) and long-term (five to ten years). Develop
a plant to match or exceed the competitor’s or industry best-in-class
performance level. Establish specific functional goals to reach the desired
levels of performance.

Step 4: Communicate benchmarking finding to management and obtain

approval. The benchmarking analysis and recommendations should be
communicated to management for approval. The recommendations
should identify specific areas for suggested improvements and strengths,
and strategies to achieve excellence by functional area. After senior
management review, the recommendations should also be
communicated to employees, to build enthusiasm and support for the
new continuous improvement goals.

Step 5: Develop and implement action plans for improvement. For each
specific objective defined, the continuous improvement team develop a
step-by-step implementation plan. Data should be collected after a period
of time to determine new performance levels. Adjustments to the
continuous improvement plans should be made if the goals are not met.
The implementation steps should also include specific work plan with
schedule dates, resources, expected benefits and measures of
performance.

Step 6: Recalibrate benchmarks for all processes. Since the right focus
for success is on continuous improvement of all work processes to
improve value and excellence, the enterprise continuous improvement
team should continue to reevaluate and update the benchmarks to
ensure that they are based on the latest data and accurate current
information. While this recalibration process for benchmarks might seen
expensive, it is well worth the effort for any enterprise that aspire to be
best-in-class in providing products and services.

2.8.9 Recognition and Reward for a Job Well Done

Management should make a sincere effort to provide real-time
recognition for a job well done, and share the gains from productivity and
quality
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improvement. To keep the continuous improvement momentum alive, all

participants that make contributions to the success of specific projects
must be rewarded. If this is not done, people become disenchanted.
Money is not the only source of motivation, However, compensation and
promotion should be related to excellent performance. Ideas
implemented for continuous process improvement should be rewarded by
management through such means as awards, recognition among peers,
bonus checks, additional technical challenge and promotion. A simple
thank-you for a job well done can go a long way toward reinforcing the
commitment of an employee to the continuous improvement of quality,
productivity and performance. A suggestion program that rewards
employees for their ideas should be encouraged. Whenever possible and
appropriate, team reward and recognition should be provided. Teams
rewards also foster continued cooperation between functional areas and
individuals.

Table 2.3 Four Year TQM Implementation Plan

Initial continuous Initial continuous

Category
improvement goals improvement goals

• Institutionalize continuous
• Set continuous improvement
improvement goals metrics • Fully trained leaders in quality
defined improvement
• Training plans for all • Process output, yield, and
Management
employees predictability
• Regular continuous process • Cross functional approaches
improvement focus at all are natural
levels • Total partnership with
customers and suppliers
• All processes under control
• Evaluate & monitor SPC utilizing SPC
 program • Variability in all processes
• Benchmark and set new well understood
Quality and targets in all areas of • Outputs and outcomes are
Reliability performance predictable
• Complete review of all • Products and processes
processes, procedures and characterized up front
specifications • Zero defects achieved in
outgoing quality
• Design for
manufacturability program
• Leading edge capability exists
• Cross functional teams
• Successful, timely, predictable
Innovation and characterize processes
technology transfers
Technology • Technology transfer
• Predominant first time success
Management methodology redefined
with timely and competitive
• Product strategy mapped to
products
continuous improvement
goals
• Elimination of costs of non-
conformance
• All processes reviewed to • Prevention costs willingly
productivity goals incurred and encouraged
• Implement cost principles • Total cost analysis well
Productivity and in equipment/materials understood and implemented
Cost Reduction • Cost of non-conformance • New processes end tools in
program statistical control
• Process simplification and • Suppliers achieving and
improvement objectives set supplying to requirements
• Reward system in place for
process simplification
• Customer and supplier
• 100% on-time delivery is partnerships prevail
minimum acceptable • Real time data and comm.
• All cycle time components links in place globally
Delivery and analyzed • Support all customers
Service • Lead times reexamined to • Sole source, certified, JIT
fit customer environment prevails
• Requirements and ‘‘world • Cycle time goals being
class” industry standards achieved and modified
Page 63

2.8.10 TQM and Continuous Improvement Goals and Objectives

Continuous process improvement is a never ending journey. New
continuous improvement goals and objectives should be set and
implemented. Ongoing focus on the efficient process that involves series
of activities which take an input, add value to it and process useful output
should be done. The goals and objectives should involve any work or
function performed in the enterprise. An example of a four year
improvement plan is presented in Table 2.3. The new continuous
improvement goals and objectives should also have specific road map for
implementation and key measures for evaluating short-term and long-
term success.

2.9 SUMMARY

The concept of Total Quality Management and continuous improvement

in processes, products and services is central to all successful
implementation of quality and productivity projects. Through continuous
improvement and management process continually see higher levels of
performance through excellence in operations execution. As part of the
continuous improvement effort all material and information flow process
should be simplified. Also, all processes should be visible and
predictable. This implies variances should be minimized in the inputs and
outputs of all operations. Everyone must be involved in the continuous
improvement effort. Leaders and managers should demonstrate
commitment to continuous improvement by example and support the
following concepts. Continuous improvement in productivity and quality
requires attention to error prevention and on-going problem resolution.
Error prevention and problem solving requires teamwork among all
departments, groups and employees. It is very important to ensure that
those charged with productivity and quality improvement be trained on
the various continuous improvement techniques and tools.

Quality excellence through continuous improvement does not happen by

accident. It required the right work plans, effective tools, techniques and
human commitment to providing excellent goods and services at
competitive cost and quality. Excellent performance is always the result
of good application of common sense, tools and techniques, high
intention, sincere effort, intelligent directions, skillful execution and
teamwork. Quality excellence and customer satisfaction involve a race
with no finish line. Success requires commitment from every member of
the organization to contribute their talents and skills to on-going process
improvement. For the
Page 64

most part, continuous improvement in quality, productivity and customer

satisfaction involves organized use of common sense and tools to find
easier and better ways of doing work.

REFERENCES

Bowen, W., 1979. Better prospects for our ailing productivity. Fortune,
December 3, pp. 68–76

Edosoimwan, J. A, 1985. Computer-aided manufacturing impact on

productivity, production quality, job satisfaction, and psychological stress
in an assembly task. Proceedings for the Annual International Industrial
Engineering Conference, December.

Edosomwan, J. A., 1986a. A conceptual framework for productivity

planning. Industrial Engineering, pp. 64–69. January.

Edosomwan, J. A., 1986b. Managing technology in the workplace: A

challenge for industrial engineers. Industrial Engineering, February, pp.
14–18.

Edosomwan, J. A, 1986c. The impact of computer-aided manufacturing

on total productivity. Proceedings of the 8th Annual Conference on
Computers and Industrial Engineering, Orlando, Florida, March.

Edosomwan, J. A, 1986d. Statistical process control in group technology

production environment. The Conference on Functional Interfacing for
Computer Integrated Manufacturing, SYNERGY ’86 Proceedings APICS
and SME, Universal City, California, June 16–18.

Edosomwan, J. A., 1986e. Productivity and Quality Management—A

challenge in the year 2000. Working paper for the Annual International
Industrial Engineering Conference, Boston, Mass. December.

Holusha, J., 1984. Quality Woes Bedevil Detroit, Gain Made, But Japan
Is Still Seen as Leader. The New York Times, April 30, p. D-l.
Juran, J. N., 1981. Product quality—A presentation for the west.
Management Review, American Management Association, June/July, p.
16.

Kendrick, J. W., 1984. In collaboration with the American Productivity

Center. Improving Company Productivity. Handbook with Case Studies.
The Johns Hopkins University Press, Baltimore and London.

Kendrick, J. W. and D. Creamer, 1965. Measuring Company Productivity:

Handbook with Case Studies. Studies in Business Economics, No. 89.
National Industrial Conference Board, New York.

Rahn, R. W., et al., 1981. Productivity, People, and Public Policy. U.S.
Chamber of Commerce, Washington, D.C.
Page 65
Chapter 3
The Productivity-Quality Connection

This chapter examines the connection between productivity and quality in

the modem business environment. Examples from the literature and case
studies are presented to illustrate that productivity and quality are
connected, interrelated, and inseparable. It is also shown that productivity
increases as quality improves. Basic mathematical expressions are
provided for the computation of the cost of quality.

3.1 THE CONNECTION

Midas (1981) stated that the key to actual productivity improvement is

understanding the elements that can bring about productivity growth. One
of these is the important leverage quality strategy can have in productivity
improvement. Danforth (1984) pointed out that too many people think that
high quality always costs more: this is wrong. Producing more—
inefficiently—at the expense of quality is no way to increase productivity.
Putting more inspectors on the line to find mistakes is the wrong
approach. Doing something over again that was not done right the first
time decreases efficiency, wastes money, and lowers productivity.
Feigenbaum (1979) estimated that poor quality can represent about 15–
40% of the plant’s productive capacity. Cole (1981) estimated the impact
of implementing the “find and fix” philosophy in the automobile industry
by stating: “An
Page 66

estimated one out of every ten workers in automobile assembly plants in

the United States is engaged in repairing substandard items, resulting in
truly staggering costs for scrap, rework, retest, downtime, yield losses,
and disposal of substandard components.” Cole further explained that
another inefficiency that results from this philosophy is that it increases
the number of inspectors required to detect defects. The author defined
inspection as an operation that adds to the cost of a product. He
estimated a typical ratio of one inspector to twenty operators in U.S.
factories and one inspector to thirty operators in Japan. Cole pointed out
that inspection detracts from productivity and that reliance on inspectors
causes employees to be less concerned about quality, which in turn leads
management to hire even more inspectors. Indeed, problems are passed
on to the dealer, who receives larger dealer preparation fees to make
adjustments and corrections. The consumer often receives a costlier
product of poor quality. This cycle reveals the disadvantages of
separating quality assurance from its execution.

3.2 BALANCING PRODUCTIVITY AND QUALITY RESULTS

The ability to balance productivity and quality goals, objectives, resources

and expected results at the individual and organizational levels can make
a difference in achieving total customer satisfaction and improved
performance. Productivity and quality are connected through the
organization goal-setting process that determines the resources to be
allocated to projects, through measures of performance, effectiveness
and efficiency and through the relationship between inputs, processes
and outputs. Productivity and quality requirements should be managed
together. One approach for balancing productivity and quality results is to
use the Productivity and Quality Assessment Matrix (PAQAM) shown in
Figure 3.1. The following steps should be utilized when implementing
PAQAM in the work environment.

Step One: Perform a thorough current environment analysis with focus

on organizational strengths and weakness, sources of quality and
productivity problems; classify all work processes by product mix,
procedures, and specific operational units goals and objectives.

Step Two: Develop a continuous improvement system for managing the

input and output components of work cells, processes work flow pattern
and the interdependencies among key process variables.
Page 67

Figure 3.1 Productivity and Quality Assessment Matrix (PAQAM).

Step Three: Train everyone on productivity and quality management

concepts and techniques. All personnel training should provide the basis
for the effective and efficient use of resources, and the ability to solve
problems.

Step Four: Develop measurement methods for productivity and quality at

the individual task and organizational levels. Productivity can be
measured as a ratio of total output to total inputs in real terms. Quality
can be measured by percent defective, internal failure costs, external
failure costs, appraisal costs and prevention costs.

Step Five: Classify the productivity and quality measures obtained in step
four in major categories: poor, fair, good, and excellent. Plot the values
obtained in the PAQAM assessment matrix.

Step Six: Perform a root cause analysis to determine why a particular

performance appears on each region. Implement improvement actions to
correct and move a poorly performing individual or task to the region of
productivity and quality excellence. In correcting poor performance, the
following strategies are recommended:
Page 68

Provide on-going counseling and feedback on performance level.

Let a poorly performing individual know how well he or she is
doing on the job.
Provide the required classroom training to correct deficiency in
skill level.
Provide the required on-the-job training (coaching) to correct
deficiency in skill level.
Match skills to the right job. Try job rotation.
Use experience personnel who perform highly to train poorly
performing individuals.
Let the poorly performing individual accept ownership on gradual
improvement steps to correct low performance level.
Reward improvement promptly by appropriate feedback.

Step Seven: Follow-up periodically on open issues. Train everyone in the

organization to use PAQAM to assess individual productivity and quality
profile. Base productivity and quality rewards in balanced
accomplishments.

PAQAM can be used to assess the productivity and quality position

periodically at the individual, task, department, and firm levels. The
balancing of productivity and quality goals, resource allocation and
expected output should be done at all levels. However, the proper
measure of a balanced productivity and quality program is the degree in
which everyone in the organization is willing to take ownership for and
pride in the final work output that goes to the customer. Productivity and
quality improvement go together; one cannot be obtained without the
other. The notion that increases in productivity and quality are impossible
should be disregarded. Increased productivity and improved quality are
quite possible if one is committed and willing to balance the apparent
contradictory sets of goals and objectives.

3.3 CASE STUDY: A PRINTED CIRCUIT BOARD

MANUFACTURING ENVIRONMENT
3.3.1 Case Study Description
A manufacturing company that produces printed circuit boards (PCB) to
customer order was interested in improving the quality of the PCB. The
Page 69

Figure 3.2 Process flow diagram for improved printed circuit board
assembly.

parts and components used for the assembly of the boards were from
different suppliers. The parts and components were assembled in a
group machining process at a certain rate of PCB per hour in each
machine group cell. The PCB production process operated at a yield of
63%. The proportion of the output that does not conform is 37%. Owing
to high demand for reliable PCB, the firm can no longer afford to ship
defective PCB to the customer. To resolve the problem, the firm instituted
eight inspection and rework processes. The direct and indirect
manufacturing cost due to inspection and rework was approximately
$288,000 per week. The increased inspection and rework stations
created additional problems: increased product cycle time, more work-in-
process inventory, decline in labor productivity, increased handling, and
additional defects created by the inspection in rework process itself.
These problems also affected the overall effective utilization of such
resources as labor and energy. The profit margin of the firm was also
affected significantly.
Page 70

Figure 3.3 Process flow diagram for improved printed circuit board
assembly.

3.3.2 Improvement Methodology and Results

A flow diagram of the PCB manufacturing process is shown in Figure 3.2.
Careful analysis revealed that there was no control in place to monitor
the production process. Control charts were developed and implemented
in all operations. The statistical process control mechanisms enabled the
process performance to be monitored properly. Corrective actions were
taken to ensure good quality at the source of production. Data gathering
and analysis were collected in real time. The implementation of statistical
process control led to significant improvement in both productivity and
quality. The tremendous amount of paperwork at each station impacted
labor productivity, and a work simplification technique was used that
reduced twenty-four forms to five and allowed the number of steps in the
process to be decreased, as shown in Figure 3.3. The bottleneck
problems between operations were resolved through the analysis of
production time, queuing time, arrival time, and waiting time for jobs. This
enabled production line balancing. Employee total involvement and
commitment to quality improvement at
Page 71

Figure 3.4 Output per labor hour for the printed circuit board assembly.
process.

Figure 3.5 Inspection cost per week for the printed circuit board
assembly process.
Page 72

Figure 3.6 First pass yield for the printed circuit board assembly process.

Figure 3.7 Total productivity index for the printed circuit board process.
Page 73

Table 3.1 Productivity and Quality Improvement in a Shoe-Manufacturing

Company

Before
After consultant analysis and
Variables consultant
implementation of new ideas
analysis

Output per labor hour

11 27
(labor productivity)
Quality defects per unit
7.9 1.4
(%)
Work-in-process
$360,000 $57,000
inventory ($)
Average Cycle Time for all
17 days 3 days
shoes produced

the source of production enabled production errors to be determined and

resolved in real time. The hours and cost of inspection were significantly
improved, as shown in Figures 3.4 and 3.5, respectively. The first-pass
yield improved by 35%, as shown in Figure 3.6. There was also an
increase in total productivity, as shown in Figure 3.7.

This case study demonstrates that productivity and quality are

connected. Techniques implemented to improve quality also improved
productivity, and vice versa. There is a correlation between productivity
and quality; it is virtually impossible to have one without the other.
However, there has to be a balance between the desire to obtain gains in
productivity and the desire to improve quality. The productivity and quality
objectives, actions, and resources utilized for improvements must be
carefully analyzed. Productivity and quality issues are corrected,
interrelated, and inseparable. Productivity increases as quality improves.

3.4 CASE STUDY: A SHOE MANUFACTURING

ENVIRONMENT
A medium-sized shoe manufacturing company had problems in
maintaining a balance of production cost, schedule, and quality.
Customer complaints revealed dissatisfaction with sport shoes quality
and also delays in receiving orders on time. Dress shoes were an
average of 30 days behind the
Page 74

delivery schedule. In order to meet customer demand, the company

placed emphasis on pushing the schedule. This resulted in a high
production cost and decreased quality of the shoes produced. A
consultant investigated the root cause of the various problems. It was
determined that the production process was unbalanced. The input and
output of each operation varied significantly. It was also found that the
shoe injection molding operation was introducing defects into the product.
This caused additional rework to be performed. More inspectors were
added to the line to inspect quality into the product. The consultant
performed a motion and time study of each operation and recommended
an approach to balance the production line. The injection molding
operation was redesigned. The results obtained in this study are
presented in Table 3.1. From these results, the production manager was
convinced that a balance can be maintained between production cost,
schedule, and quality. It was demonstrated that techniques implemented
to improve productivity also have a positive impact on quality and other
production variables.

3.5 CASE STUDY: A RESTAURANT

A fast-food restaurant unit was unsure of how to deal with the numbers of
complaints received from customers who purchased hamburgers, fish,
sandwiches, chicken sandwiches, apple pie, french fries, and drinks for
quick consumption. Within a period of 3 months there were 506
complaints from customers. The complaints ranged from an improper
amount of ketchup on hamburgers to total omission of lettuce and
tomatoes on some orders. A total of 216 customers also complained
about the amount of time spent waiting on the line to give orders and
receive food. A careful analysis of the current mode of operation revealed
that the sandwich production process was not streamlined. There were
cross motions between work stations, and the arrangement of lettuce,
tomatoes, ketchup, salt and pepper, and other cooking ingredients was a
scattered process. An attempt was made to understand the number of
people expected within a given hour. From records and a random
observation of the arrival patterns of customers to the restaurant, it was
clear that a new strategy was needed to accommodate peak periods
such as lunch from 11:30 a.m. to 1:15 p.m. and dinner from 5:30 to 7:28
p.m. The restaurant implemented two new techniques: cooking
ingredients were arranged by sandwich types, and common ingredients
were placed in sequence steps that allowed a better flow of work. Cross
motion between attendants was eliminated. The chances of making an
error were minimized. The queuing technique was
Page 75

used to predict the arrival pattern and total number of customers

expected within a given time period. Implementation of these two new
ideas resulted in a 79% reduction in the total number of customer
complaints within an equivalent 3-month period. The average waiting
time in the line was reduced from 11 minutes to 4 minutes during the
peak demand periods. The fast-food unit was able to attract additional
customers.

This case study shows that pressure on productivity or output in one

direction without careful attention to quality can be costly. However the
improvement in the quality of services in this case study was found to
have a positive impact on productivity and the overall profit posture.

3.6 CASE STUDY: A BANK

A medium-sized bank had received a series of complaints from checking

account customers. At the end of a month, 921 customers complained of
having not received the correct canceled check, or the wrong transaction
number was recorded in their statements. The check processing
operation was a manual method involving almost thirty operators. The
operators utilized serial code devices and organized the reader work area
to process each customer batch of checks from the main input source. A
careful analysis of the operation revealed that human error and the
volume of checks processed were major contributors to the customer
complaints. It was recommended that the management of the bank
implement a check processing serialized conveyor. The machine had the
capability of organizing checks by serial number, last name, and address
code. After the implementation of the new system, the jobs of thirty
operators were eliminated. The number of complaints from the checking
account customers was reduced from 921 to 63 per month. Most
complaints after the implementation of the new check serialized conveyor
system were about mechanical damage from the system. These
complaints were kept at a minimum through proper overhauling of the
system.

As shown in these four case studies, productivity and quality objectives,

issues, problems, solutions, and results are interrelated. It is almost
impossible to have one without the other. Organizations that put a
program in place to manage productivity and quality together are bound
to receive positive results. However, benefit also comes from the
application of creativity from employees and management in addressing
various day-to-day production or service challenges.
Page 76

3.7 UNDERSTANDING THE BASIC COST OF QUALITY

In Chapter I, the four categories of quality costs were discussed. In this

section, an approach is presented on how the basic cost of quality is
computed. The costs of conformance are made up of costs associated
with prevention and appraisal. The costs of nonconformance are made
up of internal and external failure costs.

Let

CAijt = appraisal costs incurred in performing task i, in site j, in period t,

resulting from inspections and repeated checks

CPijt = prevention costs incurred in performing task i, in site j, in period t,

resulting from preventive action taken to avoid defects in design,
development, manufacturing, service, and purchasing

CIijt = internal failure costs incurred in performing task i, in site j, in period

t, resulting from items that do not conform to requirements or
specifications prior to shipment from the activity or site; i = 1,2,3,..., m; j =
1,2,3,...,k; and t = 1,2,3,...,n

CEijt = external failure costs incurred in performing task i in site j in

period t, resulting from items that do not conform to requirements after
shipments from site

TCijt = total cost of quality incurred in performing task i, in site j, in period

t
Figure 3.8 Relationship between supplier, process owner, and customer
in a task environment.
Page 77

AVijt = accepted units of measure for cost of quality of task i, in site j, in

period t (AV can be in hours, weights, or monetary value) where TCijt is
expressed in hours of work or monetary terms.

The following steps can be used to obtain TCijt.

1. Chose a specific, observable task.

2. List each element involved in the task.
3. Identify the in put and output of the task.
4. Identify the effort spent on all the variables specified in expression
(3.1). The components are CAijt, CPijt, CIijt, and CEijt.
5. Estimate in quantitative terms the time (hours) spent for each item
in step 4, and compute TCijt in monetary terms by conversion.

Using the values of TCijt obtained, the analyst should investigate

contributing factors to each cost category and interact with both supplier
and customer or process owner to provide actions that eliminate or
minimize the various cost categories. In performing the analysis, the
analyst must always recognize the relationship that exists between
supplier, process owner, and customer, as shown in Figure 3.8. Work
forms for the computation of costs of quality are presented in Appendix
D.

3.8 COST OF INSPECTION PER SAMPLE

In a given task, the cost of inspection per sample can be computed by

expression (3.2):

where:

CIijt = cost of inspection per sample in task i, in site j, in period t PI =

probability of inferring the process has changed when it has not Cf =
fixed cost of inspection per sample N = sample size
Cv = variable cost of inspection per unit
Page 78

CI = cost of inferring that the process has changed when it has not The
conditional loss per inspection period can be determined by expression

(3.3):

where:

CL = conditional loss per inspection period

fk = fraction defective in state k

K = states of system (K = 1,2,...,M), with state 1 the desired state Ns =

number of samples per period

Ck = expected number of changes to state k in period Pk = probability

that a given plan will fail to detect a change to state k R = production rate
per period

Dc = cost of a defect

Duncan (1965), Fetter (1967), and ASTM (1951) provide a more

theoretical detailed discussion of sampling techniques and costs.

The next chapter presents a formalized approach for measuring

productivity. Emphasis is placed on total productivity measurement. The
productivity measurement models presented can be used at all levels of
the productivity and quality management hierarchy (PQMH).

REFERENCES

American Society for Testing and Materials, 1951. ASTM Manual on

Quality Control of Materials, Philadelphia.

Cole, R. E., 1981. The Japanese lesson in quality. Technology Review,

July, p. 29.

Danforth, D. D., 1984. Quality means doing the job right the first time.
The Wall Street Journal, March 21, p. 33.

Duncan, A. J., 1965. Quality Control and Industrial Statistics. Richard D.

Irwin, Homewood, Illinois.

Feigenbaum, A. V., 1979. American manufacturers strive for quality—

Japanese style. Business Week, March 12, p. 5.

Fetter, R. B., 1967. The Quality Control System. Richard D. Irwin,

Homewood, Illinois.

Midas, M. T., 1981. The productivity-quality connection. Design News,

December 7, p. 56.
Page 79
Chapter 4
Productivity Measurement

The concept of a formal approach to productivity measurement at the

basic level in companies and organizations is still in its infant stages of
conceptualization and rationalization. This chapter presents the benefits
of productivity measurement, a summary of the four most commonly
used productivity indices in companies, and a critique of their
effectiveness. Both the task-oriented and the technology-oriented total
productivity measurement (TOTP) model, which incorporates a new
method of inputs and outputs in the work environment, are presented.
Case studies are offered to show the validity of the models.

4.1 BENEFITS OF PRODUCTIVITY MEASUREMENT IN

COMPANIES AND ORGANIZATIONS

Edosomwan (1985a, p. 1) pointed out that in order for companies to

effectively compete in the world market and contribute to the national
growth rate of productivity in both the short run and the long run, it is
necessary for them to institute a formal productivity measurement
system. Such a system can have the following important benefits.
Page 80

1. Productivity measurement provides an important motivation for

better performance, since it helps to identify on what basis the
individual task, project, product, or customer is to be measured. It
provides the basis for planning the profit level in a company.
2. Productivity measurement highlights by means of indices those
areas within the company that have potential improvement
possibilities. Productivity values and indices also provide a way of
detecting deviations from established standards on a timely basis
so that something is done about such deviations.
3. Productivity measurement creates a basis for the effective
supervision of necessary actions to be taken and improves
decision making through better understanding of the effect of
actions already taken to address a given problem.
4. Productivity measurement can be used to compare the
performance levels of individuals, work groups, tasks, projects,
departments, and firms as a whole.
5. Productivity measurement facilitates better resource planning and
projections in both the short and the long run. It also simplifies
communication by providing common measures, language, and
concepts with which to think, talk, and evaluate the business in
quantitative terms.

4.2 DIFFICULTIES IN MEASURING PRODUCTIVITY

Kendrick (1984, p. 18) pointed out that the operational concept of

productivity involves many detailed definitions and statistical problems,
including

1. Measuring outputs whose characteristics may change over time

2. Defining and measuring real capital stocks and inputs as well as
labor inputs when the characteristics of both factors are diverse
 and changing
3. Aggregating heterogeneous units of output and input; Kendrick
further pointed out that these problems would exist even if data
were perfect and suggests using prices or unit costs for
aggregation purposes
Page 81

4.3 THE MOST COMMONLY USED PRODUCTIVITY

MEASUREMENT APPROACHES IN COMPANIES

Economic studies reported in the literature so far have used four types of
productivity measures. A description and a critique of the effectiveness of
each type follows.

4.3.1 Partial Productivity

Partial productivity is the ratio of output to one class of input. Output per
labor hour is the best example of a partial productivity measure and is the
one most commonly used. Most productivity indices published by the
U.S. Department of Labor (1980) are partial measures. Melman (1956),
Mundel (1976), and Turner (1980) have also used such measures.
However, there is a danger in using partial measures of productivity.
Siegel (1976), Craig and Harris (1972, 1973), Sumanth (1979), and
Edosomwan (1980) pointed out that a partial measure of productivity
could be misleading when viewed alone. For example, a high material
productivity could project that a company is doing well although indeed,
capital productivity, energy productivity, labor productivity, and other
indices may be low. The actual danger of partial measure is that it
overemphasizes one input and others are neglected. Turner (1980) also
agreed that a partial measure of productivity, such as output per labor
hour, could not be interpreted as an overall productivity measure since it
does not take into account all input cost. Kendrick (1984) pointed out that
partial productivity, such as labor productivity, reflects only one input
measure and cannot be viewed as overall productivity since it reflects
factor substitutions. The author recommends total productivity for overall
productivity measurement and total factor productivity when labor and
capital inputs are considered. The survey reported by Sumanth ( 1981 )
also revealed that a problem still exists in the lack of attention to total
productivity measures. As shown in Tables 4.1 and 4.2 and Figure 4.1,
the survey indicates that 91.7% of engineering organizations in industrial
companies use nonstandard productivity indicators, as do 70% in
nonindustrial companies.
Page 82

Figure 4.1 Productivity indicators. (Source: David J. Sumanth,

Productivity indicators used by major U.S. manufacturing companies: The
results of a survey. Industrial Engineering, May 1981, p. 73; and David J.
Sumanth, Survey results: How major non-industrial corporations measure
their productivity. Industrial Engineering, September 1981, p. 32.
Reprinted with Permission.)

4.3.2 Utility Index

This approach is one of the techniques proposed to measure the
productivity of a firm. Stewart (1978) presented the utility concept for
measuring manufacturing productivity. Stewart defines productivity as
‘‘the ratio of performance toward organizational objectives to the totality
of input parameters.” The essence of Stewart’s utility approach is to
combine “surrogate measures” to produce a single number. He defines a
surrogate measure as “one which is used in place of another and is often
used when the desired measure is unobtainable.” One weakness of this
index is that it fails to attribute performance to the various individual
inputs, such as raw material, technology, and energy. The utility index
offers little or no help in pinpointing specific inputs as possible sources for
improving the firm’s productivity.
Page 83

Table 4.1 Productivity Indicators in Industrial Companies

Other
Partial Total-factor Total
nonstandard
productivity productivity productivity
productivity
indicators indicators indicators
indicators

No. of No. of
No. of times No. of times
times times
Function reported % reported % % %
reported reported

Manufacturing 30 41.11 1.42 2.7

Sales 16 39.00 0.00 0.0
Marketing 6 22.20 0.00 0.021
Purchasing 4 15.40 0.00 0.022
Personnel 3 11.50 0.00 0.023
Finance and
5 23.80 0.00 0.016
accounting
Legal 1 14.30 0.00 0.0 6
Engineering 2 8.30 0.00 0.022 91.7
Research and
0 0.00 0.00 0.016 100.0
dvlpmnt
Quality
7 18.90 0.00 0.030 81.1
assurance
Maintenance 5 16.10 0.00 0.026 83.9
Industrial
0 0.00 0.00 0.018 100.0
engineering
Data
2 7.70 0.00 0.024 92.3
processing
Administration 4 18.20 0.00 0.018 81.8
Word
10 55.60 0.00 0.0 8 44.4
processing
Distrib. &
warehousing 7 24.10 0.00 0.022 75.9
Planning 1 12.50 0.00 0.0 7 87.5
Average 19.3 0.1 0.2 80.4

Source: David J. Sumanth, Productivity indicators used by major U.S.

manufacturing companies: The results of a survey. Industrial Engineering, May
1981, p.73. Reprinted with permission.
Page 84

Table 4.2 Productivity Indicators in Nonindustrial Companies

Other
Partial Total-factor Total
nonstandard
productivity productivity productivity
productivity
indicators indicators indicators
indicators

No. of
No. of times No. of times No. of times
times
Function reported % reported % reported % %
reported

Manufacturing 9 36.01 4.00 0.0

Sales 12 42.91 3.60 0.0
Marketing 1 9.11 9.10 0.0 9
Purchasing 0 0.00 0.00 0.011
Personnel 1 8.30 0.00 0.011
Finance and
5 31.30 0.00 0.011
accounting
Legal 0 0.00 0.00 0.0 4
Engineering 3 30.00 0.00 0.0 7 70.0
Research and
0 0.00 0.00 0.0 4 100.0
dvlpmnt
Quality
0 0.00 0.00 0.0 5 100.0
assurance
Maintenance 2 18.20 0.00 0.0 9 81.4
Industrial
1 10.00 0.00 0.0 9 90.0
engineering
Data
1 6.70 0.00 0.014 93.3
processing
Administration 2 20.00 0.00 0.0 8 80.0
8 53.30 0.00 0.0 7 46.7
7 53.80 0.00 0.0 6 46.2
1 12.50 0.00 0.0 7 87.5
 19.5 0.0 0.0 79.5

Source: David J. Sumanth, Productivity indicators used by major U.S.

manufacturing companies: The results of a survey. Industrial Engineering,
September 1981, p.32. Reprinted with permission.
Page 85

4.3.3 Total-Factor Productivity

Total-factor productivity is defined as “the ratio of net output to the sum of
associated labor and capital (factor inputs).” One such measure has been
recommended by Mali (1978), Kendrick and Creamer (1965), and Taylor
and Davis (1977). One disadvantage of this measure is that it omits the
cost of materials, which is one of the vital inputs in business, from the
denominator, although it is subtracted from the gross output. Omitting
such items as raw materials, supplies, and purchased parts can make
studies of cost-price relationships difficult, especially at the firm level. As
with other inputs, material and computer inputs form important cost
elements, and any savings obtained through their usage per unit of
output affects the total unit cost of output and hence the prices.

4.3.4 Total Productivity Measure

The total productivity measure considers total output in relation to total
input and has been proposed by most authors. For the most part there
have been significant variations in the definition of the input and output
elements. Various authors have also proposed different allocation criteria
for specifying the proportional contributions of each input element to the
final output.

Kendrick and Creamer (1965), Craig and Harris (1972,1973), Hines

(1976) Mali (1978), Sumanth (1979), and Kendrick (1984) have proposed
such measures. Some total productivity measures are presented vaguely
and as general relationships between some measurable input and output
elements; others use unquantifiable descriptions. For example, Mali
(1978) defined productivity as the ratio of effectiveness to efficiency. It
might be difficult to quantify effectiveness numerically in a real-world
application.

Other measures of productivity proposed in the literature include the

array approach of Dewitt (1970,1976), the financial ratio approach of
Tucker (1961), Gold (1976), and Aggrawal (1979); the capital budget
approach of Mao (1965); and the production function approach of
Dhrymes (1963).
In the various productivity measures outlined above, only a few total
productivity measurement models focus on both the production and
service environment and without recognition of the impact of computers
and robotics on productivity results. In most cases computer and robot
Page 86

applications are treated as fixed capital, or only the supplies needed to

operate the computer and robots are treated as an information
processing cost.

The current available theory of productivity is not concerned with

productivity measurement at detailed functional levels, such as by task or
by project. Nothing has been done in developing useful relationships
between the total and partial productivities of multitasks and no attempts
made to relate total and partial productivity indices and values to a
costing philosophy adopted by a given firm.

Methodologically, aggregation techniques have been used to measure

the overall productivity of a firm. At the firm level, such aggregation
techniques have provided different results depending on the type of
allocation criteria used for other individual resources, overhead cost the
definition of fixed and working capital, floor space, and other factors.

The available productivity measurement models also omit the new

technological version in which machinery becomes a variable cost.
However, some of the total productivity measures, such as those of
Kendrick and Creamer ( 1965), Sumanth ( 1979), and Craig and Harris
(1972, 1973), provide a basis for quantifying in meaningful terms some of
the measurable input and output elements. From the discussion
presented so far in this section, the shortcomings and strengths of the
present productivity measurement approaches at the firm level have
been highlighted. Obviously, there is a need for appropriate productivity
measurement by task and technology, for example, and through
aggregation techniques to extend such measures to the firm level.

4.4 THE TASK-ORIENTED TOTAL PRODUCTIVITY

MEASUREMENT (TOTP) MODEL

The task-oriented total productivity model developed and recommended

by Edosomwan (1985a) is based on all possible measurable output and
input components. An incremental analysis is somewhat implicit in the
model. The measures derived from this model are in the form of an index
that intuitively has the following properties and advantages.
Page 87

1. The indices derived use the broadest possible input (labor,

materials, energy, robotics, computers, capital, data processing,
and other administrative expenses) and output (finished units
produced, partial units produced, and other output associated with
units produced).
2. The productivity indices derived vary with changes in task
parameters, resources utilized, and output obtained from the
transformation of resources.
3. The productivity indices derived are comparable over time and can
objectively be used to measure the productivity of tasks, customs,
products, projects, work groups, departments, division, and
company.
4. They provide a means of focusing on key problem areas for
productivity improvement. The indices identify which particular
input resources are utilized inefficiently so that an improvement
action plan can be implemented.
5. The indices can be used in productivity planning and improvement
phases. They also offer a basis for companies in planning every
phase of a product or technology development cycle.

4.4.1 Key Definitions Associated with the Task-Oriented Total

Productivity Measurement Model
Task: At the basic level, a task is a unit of work accomplished primarily at
a single location (site), by a single agent, during a single time period,
producing useful output from some resources available.

Total productivity is the ratio of total measurable output (total finished

units produced, partial units produced, and other output associated with
units produced) to the sum of all the measurable inputs (labor, materials,
capital, energy, robotics, computers, data processing, and other
administrative expenses) utilized for production.

Total factor productivity is the ratio of total measurable output to the sum
of labor and capital inputs.

Partial productivity is the ratio of total measurable output to one class of

measurable input (for example, labor hours utilized for production or
service).
Page 88

4.4.2 Input and Output Components of the Task-Oriented Total

Productivity Measurement Model
The input and output components of the task-oriented total productivity
measurement model are shown schematically in Figures 4.2 and 4.3. (A
description of each component of the model is offered in Section 4.4).

4.4.3 Derivation of Productivity Values and Index Notations

Let

i = manufacturing or service task

Figure 4.2 Input components considered in the task-oriented total

productivity model. (From Edosomwan, 1985a and 1986.)
Page 89

Figure 4.3 Output components considered in the task-oriented total

model. (From Edosomwan, 1985a and 1986.)

manufacturing or service plant location

j = (j = 1,2,3,...,m) (model can be applied simultaneously in more than one
site)
t = study period t = 1,2,3,...,n
Oijt = total quantity of units produced (total output) by task i, in site j, in period t
Fijt = finished task (finished units produced) by task i, in site j, in period t
PCijt percentage completion of partial units produced by task i, in site j, in
= period t
partially completed task (partial units of units produced) by task i, in site j,
Pijt =
in period t
SPijt base period selling price per unit for a unit produced by task i, in site j, in
= period t
CRijt varialble computer-related expense input in dollars utilized by task i, in
= site j, in period t
Page 90

RRijt variable robotics-related expense input in dollars utilized by task i, in site j,

= in period t
Lijt
labor hours input utilized by task i, in site j, in period t
=
LRijt
labor rate per hour utilized by task i, in site j, in period t
=
Mijt material and purchase parts expense input in dollars utilized by task i, in
= site j, in period t
capital-related expense (includes fixed and working capital, such as cash,
Cijt accounts receivable, tools, plant, buildings, amortization, and research and
= development) input in dollars utilized by task i, in site j, in period t (capital
is computed using the lease value concept)
Eijt energy-related expense (includes electricity, solar energy, water, coal, and
= gas) input in dollars utilized by task i, in site j, in period t
DPijt varialble data processing expense input in dollars utilized by task i, in site j,
= in period t
other administrative expense-related expense input in dollars utilized by
OEijt
task i, in site j, in period t(other expense includes travel, taxes, professional
=
fees, marketing, research and development, and general administration)
Yijt
total productivity of task i, in site j, in period t
=
TFijt
total factor productivity of task i, in site j, in period t
=
Pijt
partial productivity of task i with respect to one input in site j, in period t
=
Iijt = total input of task i, in site j, in period t
Base period time (a reference period to which the output and input in
Tb = monetary terms is reduced; thus, the total productivity of task expressed as
dollar output per dollar input in constant dollars)
The total and partial productivities for a given task expressed as follows.
Let

Page 91
Let

The total, total-factor, and partial productivities for a given task in any
period are schematically presented in Figure 4.4.

4.4.4 Implementation Methodology for the Task-Oriented Total

Productivity Measurement Model
Implementing the task-oriented total productivity measurement model in a
company or organization is relatively easy if the step-by-step procedure
presented schematically in Figure 4.5 is followed. Each step will now be
described.

Step 1: Familiarization Sessions

In this step, a formal study of the work environment and processes,
procedures, cost accounting system, types of product produced or
services, types of operations, and tasks performed is carefully conducted.
A formal acquaintance with key personnel in the various departments is
Page 92

Figure 4.4 Total, total factor, and partial productivities for a given task in
any site j in period t.

essential. In order to ensure total involvement of everyone in the

organization, a kickoff meeting is recommended. Such a meeting must
have the support of upper management. The meeting should be geared
toward explaining the objectives and benefits of the productivity
measurement program to every level of employee and management.

The formal meeting should establish commitments from everyone and

provide a good communication link among people and departments. The
elements of the familiarization circle are shown in Figure 4.6.

Step 2: Task Significance, Input-Output Analysis

There are two approaches in trying to select the scope of productivity
measurement within an organization. One approach, particular to small
firms, involves a choice of measuring the productivity of every task,
Page 93

Figure 4.5 Implementation steps for the task-oriented total productivity

measurement model.

department, product, customer, and the firm as whole. The other

approach, particular to larger organizations, is to measure the
productivity of tasks that account for a significant amount of business
volume and revenue. In this step the productivity coordinator, working
with the team members of the measurement program, selects a set of
tasks by using historical data on sales, profits, and costs. It is
recommended that the sales records and income statements for the last
24-month accounting period be used to determine the percentage of
contribution for each task performed. Applying Pareto’s law, determine
and select those tasks that account for 80 percent or more of the
company’s total sales and cost. For an organization starting business for
the first time and also instituting a productivity measurement program for
the first time, select the tasks by estimating the products or services that
account for 80 percent or more of the organization’s total production and
sales. The final selection of tasks to be considered in the productivity
measurement program should also be supplement by managerial
judgment. The elements of the task significance and input-output analysis
are shown schematically in Figure 4.7.
Page 94

Figure 4.6 Components of productivity measurement familiarization

sessions.

Figure 4.7 Task significance, input-output analysis for the productivity

measurement program.
Page 95

Step 3: Development of Allocation Criteria for Overhead Expenses

Although several overhead allocation criteria exist, the most generally
used traditional cost accounting and industrial engineering approach is
the proportional contribution of direct hours to allocate overhead expense
to a product or task. This approach requires daily direct labor recording
and the derivation of burden rate from net expense and direct hours.
Therefore, product costs included labor and burden. Allocation of
overhead is done using direct hours and one burden rate applied to all
products produced or services rendered by the organization. In direct
hours allocation criteria, some product costs may be misallocated,
especially in situations in which multiple products are produced. It must
also be pointed out that the allocation criteria for the output and input
elements needed for productivity measurement may vary depending on
the type of production or service environment, costs, accounting
information, and managerial preferences. Ideally, it is more convenient to
capture all output and input elements for each task. Streamlining input
and output components is difficult and uneconomical if the right criteria
are not used. Using the task-oriented total productivity measurement
model, two types of allocation schemes for input and output components
are recommended.

The first allocation scheme is based on the concept of ‘‘proportion.” The

proportional contribution of sales, profit, cost, and quantity produced is
used as a factor to allocate overhead expenses to tasks. The second
allocation scheme is based on the concept of “complexity factor.” This
scheme proposes the use of a product complexity factor in allocating
overhead expenses to tasks. The complexity factor is determined through
such items as component counts, insertion rates, component preparation
time, and design configuration. Energy usage, floor space, telephone,
indirect efforts, and supervision costs are seen as a function of the
complexity factor. The elements of the allocation criteria steps are shown
schematically in Figure 4.8.

Step 4: Base Period and Deflator Selection

The base period is a reference period in which the output and input
values in monetary terms are reduced. Thus, the total productivity of a
task is expressed as dollar output per dollar input in constant dollars. The
criteria for selecting a base period depends upon
Page 96

Figure 4.8 Elements in the development of allocation criteria for

overhead expenses in productivity measurement.

1. Whether a productivity measurement program (PMP) is instituted

for the first time
2. How often new tasks are introduced
3. How often the products produced or services rendered are
changed
4. Whether the productivity values and indices are established on a
monthly, quarterly, semiannual, or annual basis
5. Whether there have been abnormal developments within the
organization, such as unprecedented layoffs, strikes, and lockouts
6. How often the data collection system is updated
7. Whether there has been any abnormal reorganization within the
organization, such as conversion of direct effort labor to indirect, or
vice versa
8. Whether there have been seasonal demand patterns for the
product produced or services offered by the organization
9. Whether the trend analysis time period chosen for the
management reporting system includes or excludes a particular
business time frame based on managerial judgment
Page 97

Table 4.3 Labor Input Regression Analysis Using CPI

Month (X) Index (Y) XY X2 Y2

1 - Nov. ’78 4.04 4.04 1 16.32

2 - Dec. ’78 4.08 8.16 4 16.65
3 - Jan ’79 4.17 12.51 9 17.39
4 - Feb. ’79 4.17 16.68 16 17.39
5 - Mar ’79 4.19 20.95 25 17.56
6 - Apr. ’79 4.19 25.14 36 17.56
7 - May ’79 4.20 29.40 49 17.64
8 - June ’79 4.21 33.68 64 17.72
9 - July ’79 4.23 38.07 81 17.89
10 - Aug. ’79 4.21 42.10 100 17.72
11 - Sept. ’79 4.28 47.08 121 18.32
12 - Oct. ’79 4.32 51.84 144 18.66
13 - Nov. ’79 4.33 56.29 169 18.75
X=91 Y= 54.62 XY= 385.94 X2 =819 Y2 =229.57

1. Whether there is significant effect of other external factors, such

as interest rates, on the organization’s input and output levels

The elements involved in the selection of the base period are shown
schematically in Figure 4.9. Deflators are needed in situations in which
the output and input cannot be expressed in physical units. The main
sources of deflators are consumer price indices, producer price indices,
wage rates, material price indices, energy price indices, and the like.
These indices are obtainable from the monthly labor reviews published
by the Bureau of Labor Statistics, Washington, D.C. In situations in which
it is difficult to obtain the deflators on real-time basis, they can be forecast
using historical data from the price indices. Examples of forecasted
deflators for labor, energy, capital, administrative expenses, materials,
and output components will now be presented. The consumer price
indices obtained from the monthly labor review are used. Regression
analysis is used for forecasting deflators and indices for future time
periods. Whether the forecasted values had a high correlation was also
determined.
Page 98

Figure 4.9 Elements in base period selection.

Table 4.4 Predicted Index Values for Labor Input

Month (X) Equation Index (Y)

14 - Dec. ’79 Y = 4.06 + 0.0198(14) 4.34

15 - Jan. ’80 Y = 4.06 + 0.0198(15) 4.36
16 - Feb. ’80 Y = 4.06 + 0.0198(16) 4.38
17 - Mar. ’80 Y = 4.06 + 0.0198(17) 4.40
18 - Apr. ’80 Y = 4.06 + 0.0198(18) 4.42
19 - May ’80 Y = 4.06 + 0.0198(19) 4.44
20 - June ’80 Y = 4.06 + 0.0198(20) 4.46

Table 4.5 Deflators for Labor Input

Jan. Feb. Mar. Apr. May June

’80 ’80 ’80 ’80 ’80 ’80

Index 4.36 4.38 4.40 4.42 4.44 4.46

Deflator 1.000 1.005 1.009 1.013 1.018 1.022
Page 99

Table 4.6 Energy Input Regression Analysis Using CPI

Month (X) Index (Y) XY X2 Y2

1 - Nov. ’78 226.0 226.0 1 51,076.0

2 - Dec. ’78 228.5 457.0 4 52,212.2
3 - Jan ’79 231.8 695.4 9 53,731.2
4 - Feb. ’79 235.3 941.2 16 55,366.1
5 - Mar’79 241.7 1208.5 25 58,418.9
6 - Apr. ’79 251.2 1507.2 36 63,101.4
7 - May ’79 262.2 1835.4 49 68,748.8
8 - June ’79 277.3 2218.4 64 76,895.3
9 - July ’79 289.2 2602.8 81 83,636.4
10 - Aug. ’79 298.8 2988.0 100 89,281.4
11 - Sept. ’79 307.0 3377.0 121 94,249.0
12 - Oct. ’79 310.2 3722.4 144 96,224.0
X = 78 Y = 3159.2 XY = 21,779.3 X2= 650 Y2= 842,940.7

Table 4.7 Predicted Index Values for Energy Input

Month (X) Equation Index (Y)

13 - Nov. ’79 Y = 206.7 + 8.70(13) 319.2

14 - Dec. ’79 Y = 206.7 + 8.70(14) 328.5
15 - Jan. ’80 Y = 206.7 + 8.70(15) 337.2
16 - Feb. ’80 Y = 206.7 + 8.70(16) 345.9
17 - Mar. ’80 Y = 206.7 + 8.70(17) 354.6
18 - Apr. ’80 Y = 206.7 + 8.70(18) 363.3
19 - May ’80 Y = 206.7 + 8.70(19) 372.0
20 - June ’80 Y = 206.7 + 8.70(20) 380.7

Table 4.8 Deflators for Energy Input

 Jan. Feb. Mar. Apr. May June
’80 ’80 ’80 ’80 ’80 ’80

Index 337.2 345.9 354.6 363.3 272.0 380.7

Deflator 1.000 1.026 1.052 1.077 1.103 1.129
Page 100

Table 4.9 Output, Material, Capital, and Other Administrative Expenses:

Regression Analysis Using Consumer Price Indexes

Month (X) Index (Y) XY x2 Y2

1 - Nov. ’78 105.6 105.6 1 11,151.4

2 - Dec. ’78 105.8 211.6 4 11,193.6
3 - Jan ’79 105.4 316.2 9 11,109.2
4 - Feb. ’79 105.3 421.2 16 11,088.1
5 - Mar’79 106.9 534.5 25 11,427.6
6 - Apr. ’79 109.2 655.2 36 11,924.6
7 - May’79 109.9 769.3 49 12,078.0
8 - June ’79 110.4 883.2 64 12,188.2
9 - July ’79 110.9 998.1 81 12,298.8
10 - Aug. ’79 110.0 1100.0 100 12,100.0
11 - Sept ’79 112.5 1237.5 121 12656.2
12 - Oct. ’79 114.0 1368.0 144 12,996.0
X=78 Y =1305.9 XY = 8600.4 X2 = 650 Y2 = 142,211.7

Table 4.10 Predicted Index Values for Output, Material, Capital, and Other
Expenses

Month (X) Equation Index (Y)

13 - Nov. 79 Y = 103.7 + 0.784(13) 113.9

14 - Dec. 79 Y = 103.7 + 0.784(14) 114.7
15 - Jan. ’80 Y = 103.7 + 0.784(15) 115.5
16 - Feb. ’80 Y = 103.7 + 0.784(16) 116.2
17 - Mar. ’80 Y = 103.7 + 0.784(17) 117.0
18 - Apr. ’80 Y = 103.7 + 0.784(18) 117.8
19 - May ’80 Y = 103.7 + 0.784(19) 11836
20 - June ’80 Y = 103.7 + 0.784(20) 119.4
Table 4.11 Deflators for Output, Material, Capital, and Other Expenses

Jan. Feb. Mar. Apr. May June

’80 ’80 ’80 ’80 ’80 ’80

Index 337.2 345.9 354.6 363.3 272.0 380.7

Deflator 1.000 1.026 1.052 1.077 1.103 1.129
Page 101

Step 5: Data Collection Design

In this step, various forms and instruments are designed to capture the
input and output elements needed for the task-oriented productivity
model. In designing these forms, various factors, such as how often data
are collected, the information required, computation steps, the scale of
measurement, and clarity, are considered. The input and output elements
must be evaluated to ensure that they can be collected periodically. The
productivity analyst or coordinator must involve key personnel from the
various departments in the review of the data collection system.
Proposed changes to the data collection system are usually easily
adopted if they have the approval of both upper management and
employees. The interaction steps are shown in Figure 4.11.

Step 6: Personnel Training and Testing of Data Collection

Instruments
In this step, the productivity measurement team is trained for a
reasonable period of time on how to perform the measurement of input
and output

Figure 4.10 Elements involved in deflator selection.

Page 102

Figure 4.11 Key steps in data collection.

elements and how to complete the productivity measurement forms,

safety regulations, and operating procedures. The data collection
designed in step 5 should be pretested with the involvement of both
workers and managers and revised for better clarity. Usually it takes
about four 1-hour sessions to acquaint the productivity team with the
productivity measurement package. Figure 4.12 shows the steps needed
in the training of personnel and testing of data collection systems.

Step 7: Data Collection, Synthesis, and Computations

Using the various forms designed in step 5, input and output components
needed for the productivity measurement model are collected periodically
for each task. The productivity analyst reviews the data collected and
eliminates unnecessary information. The synthesized data are used to
compute the values and indices for partial and total productivities. It is
recommended that a data base be developed for synthesized data for the
analysis of productivity trends. The example presented in the case study
shows how the productivity values
Page 103

Figure 4.12 Steps in personnel training data collection testing.

and indices are computed. The results may be displayed in form of bar
charts or trends for easy understanding by upper management. In
situations in which there are many tasks, it is recommended that
productivity information be grouped into meaningful subgroups. The
steps are presented in Figure 4.13.

Step 8: Trend Analysis and Interpretation of Findings

The partial and total productivities for each task obtained by period are
analyzed periodically, seeking reasons for an increase or decrease.
Statistical techniques, such as analysis of variance (ANOVA), can be
used to interpret the data collected. By relating the partial productivities
and their impact on the total productivity, specific areas that need to be
investigated for improvement can be pinpointed. The productivity
improvement and planning team uses information obtained for both short-
and long-range improvement and planning. Key actions are developed
and implemented for the problem areas. The elements involved in the
trend analysis are shown in Figure 4.14.
Page 104

Figure 4.13 Steps in data collection synthesis and computations.

Figure 4.14 Steps in trend analysis and interpretation of findings.

Page 105

4.5 CASE STUDY: COMPARISON OF THE MANUAL AND

COMPUTER-AIDED METHODS OF ASSEMBLING PRINTED
CIRCUIT BOARDS USING THE TASK-ORIENTED TOTAL
PRODUCTIVITY MODEL*

The task-oriented productivity measurement model was used in plant Z to

measure and compare partial and total productivities of the manual and
computer-aided methods of assembling printed circuit boards. A formal
study of the Z printed circuit board manufacturing process, procedure,
cost accounting system, type of printed circuit board produced, types of
operations, task performed, and the J-2000 computer operation was
conducted.

The key personnel in the various departments were introduced and made
to understand the purpose of the productivity measurement system. The
significance of each task performed, the extent of the manual method of
assembling (PCB), computer usage, and the associated input-output
relationship of tasks were determined. For the purpose of our study at
plant Z, a proportional contribution to the total number of printed circuit
board insertions was used as allocation criterion for overhead expenses.
The allocation criterion was preferred to other allocation schemes
because energy usage, machine utilization, and component preparation
time varied with the number of insertions.

Plant Z manufactured various printed circuit board types that required

different amounts of insertions. For example, printed circuit board Mark I
type required 218 insertions as opposed to printed circuit board Mark II
type with 210 insertions. Mark I therefore utilized more energy than Mark
II; similarly, Mark I utilized more machine time and more labor time for the
preparation of components inserted. The various printed circuit board
types and the number of insertions in each printed circuit board are
presented in Table 4.12. Generally, the input and output elements of the
TOTPM model are deflated in order to remove the effect of price
changes. If needed, the deflators are obtained from the monthly labor
review published by the Bureau of Labor Statistics, Washington, D.C.
The deflators are chosen based on their correlation with the various input
and output elements. In this study, the deflators were not required
because the study period was only 5 weeks, not long enough for
significant variations in price.

*Adapted from Edosomwan, 1985. Reprinted with permission.

Page 106

Table 4.12 Summary of Printed Circuit Board Insertion Rate at Plant Za

Printed circuit board typeNumber of insertions in each printed circuit board type

Mark I 218
Mark II 120
Mark III 262
Mark IV 98

a Mark I was the printed circuit board type considered in our study
Various forms and instruments were designed to capture the input and
output elements needed for the task-oriented productivity model. In
designing these forms, various factors, such as how often data were
collected, the information required, computation steps, the scale of
measurement, and clarity, were considered.

The subjects were trained for 1 week on how to perform both the manual
and computer tasks and how to complete the productivity measurement
forms. They were also taught safety regulations and plant Z operating
procedures. The data collection instruments designed were pretested
with five workers and two managers, and revised for better clarity. The
operators were selected at random to perform the manual and computer-
aided printed circuit board assembly tasks.

Using the various forms, input and output components needed for the
productivity model were collected periodically for each individual worker
as well as for each group that performed the manual and computer-aided
tasks. Synthesized data were used to compute the values and indices for
partial and total productivities.

4.5.1 Results
The input and output components and total and partial productivities by
period for both the manual and computer-aided tasks are shown in
Tables 4.13 and 4.14. A summary of the research findings is also
presented in Table 4.15. Examples of ANOVA tables for total and labor
productivities are shown in Tables 4.16 and 4.17. At the α = 0.05 level of
significance,
Page 107

Table 4.13 Output and Input Components for Manual and Computer-Aided
Tasksa

Period 1 Period 2 Period 3 Period 4 Period 5

Function M C-A M C-A M C-A M C-A M C-A

Quantity of
finished
PCB
produced %
completion
of partial 40 55 38 53 35 54 39 53 40 54
units of
PCB
Quantity of
partial PCB
produced
Average
selling price
1000 1000 1000 1000 1000 1000 1000 1000 1000 1000
per unit of
PCB ($)
Total
40,00055,00038,00053,00035,00054,00039,00053,00040,00054,000
Output ($)
Labor
expense 85 85 84 84 84 84 84 84 84 84
input ($)
Material
expense 4147 5775 3990 5565 3675 5617 4147 5513 4200 5517
input ($)
Capital
expense 63 73 56 67 60 71 61 70 62 73
input ($)
Energy
expense 86 96 86 96 86 96 86 96 86 96
input ($)
Robotics
expense
input ($)
Computer
expense 98 101 97 100 104
input ($)
Other
admin.
4417 5082 4417 5111 4417 5093 4417 5088 4417 5107
expense
input ($)
Total Input
8798 11,0008633 10,9238322 10,9618795 10,8518849 10,877
($)

aNote: No partial units of PCB were produced during the study period. No
robotics expense was incurred.
Page 108

Table 4.14 Total and Partial Productivities for Manual and Computer-Aided PCB
Tasks

Period 1 Period 2 Period 3 Period 4 Period 5

Productivity
M C-A M C-A M C-A M C-A M C-A
Items

Total
value 4.55 4.95 4.40 4.85 4.21 4.93 4.43
index 1.00 1.00 0.97 0.98 .93 0.99 0.97
Labor expense
value 470.59647.06452.38630.95416.67642.86464.29630.95
index 1.00 1.00 0.96 0.98 0.89 0.99 0.99 0.98
Material expense
value 9.65 9.52 9.52 9.52 9.52 9.61 9.40 9.61 9.52
index 1.00 1.00 0.97 1.00 0.97 1.01 0.97 1.01 0.97
Capital expense
value 634.92753.42678.57791.04583.33760.56639.34757.14645.16739.73
index 1.00 1.00 1.07 1.05 0.92 1.01 1.01 1.00 1.02 0.98
Energy expense
value 465.11572.92441.86552.08406.98562.50453.48552.08465.12562.50
index 1.00 1.00 0.95 0.96 0.88 .98 0.97 0.96 1.00 0.98
Robotics expense
value - - - - - - - - - -
index - - - - - - - - - -
Computer expense
value - 561.22- 524.75- 556.70- 530.00- 519.23
index - 1.00 - 0.94 - 0.99 - 0.94 - 0.93
Other
administrative 9.06 10.82 8.60 10.37 7.92 10.60 8.83 10.42 9.06 10.57
expense
value 1.00 1.00 0.95 0.96 0.87 0.98 0.97 0.96 1.00 0.98
index
Page 109

Table 4.15 Summary of Research Findings for Case Studya

Difference in mean productivity Impact on total and

Significant
values between manual and partial
Variable at 0.05
computer task productivities

Total
0.49 C+ M- Yes
productivity
Labor expense
productivity182.92 C+ M- Yes
Material
expense
productivity 0.09 C* M- No
Capital
expense
productivity124.12 C- M- Yes
Energy
expense
productivity113.91 C- M- Yes
Computer
expense
productivity538.38 C- M- Yes
Other
administrative
expense
1.87 C- M- Yes
productivity

a C+ = computer-aided task had positive impact on productivity. C- = computer-

aided task had negative impact on productivity. M+ = manual task had positive
impact on productivity. M- = manual task had negative impact on productivity. *
= no significant difference in productivity was observed.
Table 4.16 Total Productivity—Manual Task Versus Computer-Aided Task
(ANOVA)(r = 0.05)a
 Degrees
Source of of Sum of Mean Critical
variation Freedom squares squares Observed °F
(SV) (DF) (SS) (MS) F values values

Between task 1 1.60 1.60 160.0 7.71

Between days 4 0.05 0.01 1.0 7.71
Error 4 0.03 0.01 - -
Total 9 13.68 - - -

aBetween task conclusion: Since F data = 160.0 > °F critical = 7.71. We reject
Ho and conclude that there Is significant difference in total productivity between
computer task and manual task. Computer task Increases total productivity more
than manual task. Between days conclusion: Since F data = 1.0 > °F critical =
7.71. We accept Ho and conclude that there is no significant day effect for
computer task and manual task.
Page 110

Table 4.17 Labor Productivity—Manual Task Versus Computer-Aided Task

(ANOVA)(r = 0.05)a

Degrees
Source of of Sum of Mean Critical
variation Freedom squares squares Observed °F
(SV) (DF) (SS) (MS) F values values

Between task 1 18.28 18.28 261.1 7.71

Between days 4 0.34 0.08 1.14 7.71
Error 4 0.28 0.07 - -
Total 9 18.90 - - -

a Between task conclusion: Since F data = 261.1 > °F critical = 7.71. We reject
Ho and conclude that there is significant difference in labor productivity between
computer task and manual task. Between days conclusion: Since F data = 1.14 >
critical = 7.71. We accept Ho and conclude that there is no significant day effect
in labor productivity from computer task and manual task.
there was a significant difference in total and labor productivities between
the two tasks. The computer-aided method increased total and labor
productivities more than the manual method of assembling the printed
circuit boards. The programming sequence of the computer-aided
method enabled operators to work at a faster pace, and with the aid of
the rotating bin and special handling fixtures on the machine, operators
were able to assemble two printed circuit boards simultaneously. On the
other hand, the manual method required operators to work at their own
pace and also required more hand motion because of the way the work
stations were arranged.

The computer-aided method was also found to have decreased energy,

capital, computer operating expense, and other expense productivities. In
addition to the energy utilized for the lighting fixtures, the computer-aided
method also utilized direct electricity to run the rotary bin and the
movement of the assembly fixtures. The manual method utilized energy
only for the lighting fixtures. Under the lease concept approach for
capital, the computer-aided method utilized more capital than the manual
method to support tools, maintenance, programming, safety, and indirect
effort supervision costs. This impacted both computer operating
expenses and
Page 111

Figure 4.15 The total productivity trend for manual and computer-aided
tasks.

other expense productivities. No significant difference in material

productivity was observed. Although the results have been used to
compare the computer-aided and manual methods of assembling printed
circuit boards, the trends for each task by period are also essential,
especially for investigating areas that need productivity improvement.
The total productivity trend for the manual and computer-aided tasks is
presented in Figure 4.15. In the situation of interest, the decision maker is
not only faced with using the computer-aided method to accept gains in
total and labor productivities but also investigating and continuing to
improve the other partial productivities (energy, capital, computer
operating expense, and other expenses) while using the manual method
to assemble the printed circuit boards in an environment in which labor is
inexpensive.
Page 112

4.6 CASE STUDY: ROBOTIC DEVICE IMPACT ON TOTAL

PRODUCTIVITY IN PRINTED CIRCUIT BOARD ASSEMBLY
TASK*

4.6.1 Research Site and Methodology

Data were collected at a manufacturing plant that introduced and used
robotic device J-1515 in the assembling of printed circuit boards. Manual
insertion of the electronic components was considered difficult and time
consuming. Comparison of the total productivity of both the manual and
robotic device method was needed to select the best production method.

4.6.2 Description of the Manual Method of Assembling Printed

Circuit Boards
The manual method of assembling printed circuit boards was a process
in which the production worker manually inserted components such as
resistors, diodes, modules, transistors, and capacitors into an empty
circuit board or raw card.

The work area was in an approved electrostatic discharge area that

consisted of a grounded work bench, chair, tools, and a light box. The
manual assembly process started with the verification of paperwork and
parts. The component placement list (CPL), picklist, routing, part
numbers, engineering change level, serial numbers, templates, and any
special instructions were checked before assembly. The foil, which was a
blueprint of component insertions, was placed on the lightbox. The foil
contained the outline for two boards. The components were manually
inserted, one at a time, according to the foil. Upon completion of both
cards, they were each verified with the CPL and template. If any rework
or scrap was to be done it was performed in a manner similar to that of
insertion. When the printed circuit boards were completely assembled
and verified, they were manually placed into trays.

*Source. From Edosomwan, J. A., 1986. A methodology for assessing

the impact of robotics on total productivity in an assembly task. Annual
International, Industrial Engineering Conference Proceedings, Dallas,
Texas, May 9–11. Reprinted with permission.
Page 113

4.6.3 Description of the Robotic Device Method of Assembling

Printed Circuit Boards
The robotic device method of printed circuit board assembly was a
process in which the production worker assembled printed circuits using
the robotic device J-1515 and controller. The robot was used to insert
rectangular chip packages varying from a fraction of an inch to 1 1/2
inches onto a partially populated printed circuit board.

The work area was in an approved electrostatic discharge area that

consisted of robotic devices J-1515 and controller, module insertion
heads for 1/2 inch and 1 1/2 inch modules, machine base, clinch unit,
application control, cabinet, industrial program computer, module feeder,
manual card feeder, card carriers, and a set of inspection templates.

The robotics method of assembly begins in a manner similar to the

manual method. The process begins with verification of the job
paperwork and parts. The paperwork is the same as that used in the
manual process, with the exception of any special instructions unique to
the operation of the robot.

Once the job paperwork and parts are verified, the operator is ready to
begin the setup of the tool, in the following steps. Ensure that all switches
are in the on position, as outlined in the operating procedure; obtain the
proper workboard holder, and load onto the fixture. Once the fixtures are
loaded, the operator is ready to load the PCB assembly program into
memory in preparation for assembly. The program contains the insertion
pattern and indicates which part number is to be loaded in the proper
input channel. The program would then position the X-Y table into the
proper position and guide the robot arm to the proper channel to pick up
a part and insert the part into the PCB.

4.6.4 Measurement Method for Productivity

The task-oriented total productivity measurement model presented in
Section 4.4 was used in this study. The implementation methodology
described in Section 4.4 was followed.
4.6.5 Results
As shown in Figures 4.16 through 4.20, when the manual method of
assembling printed circuit boards was changed to the robotic device
method there was an increase in labor and total productivity. The robotic
Page 114

device method was able to work consistently faster than the manual
method. The programming sequence of the robotic device eliminated
extra motions that were performed using the manual method. Excessive
transportation, handling, grasping, and reaching motions were eliminated
using the robotic device method. Although the robotic device used a
consistent pace, the manual method required operators to work at their
own pace and also required more motions because of the way the work
envelope was designed. The robotic device method was found to have
decreased energy, capital, robot operating expense, data processing,
and other productivity expenses. More electricity was utilized to support
the mechanical motion of the robot movements. The manual method
utilized electricity only for the lightbox. The robotic device required more
indirect effort in supervision and more maintenance, safety procedures,
programming support, and tooling costs. This accounted for the decrease
in most of the partial productivities. However, the gains in labor
productivity were large enough to offset the impact of the operating costs.
It is important to improve the design of the robot to minimize the
operating cost; if not, in the long run total productivity may be significantly
affected.

Figure 4.16 Total productivity values for the manual PCB task
Page 115

Figure 4.17 Total productivity indices for the manual PCB task.

Figure 4.18 Total productivity values for the J-1515 robot PCB task.
Page 116

Figure 4.19 Total productivity indices for the J-1515 robot PCB task.

This is perhaps the first attempt to assess the impact of a robotic device
on total productivity. In the past, labor productivity and the rate of return
on investment (ROI) has been used to justify the application of
technology, such as robotic devices. These measures are partial
measures that do not consider the total cost of doing business. Variable
operating cost has often been neglected. The total productivity
measurement approach presented here has a wide range of application
in assessing the productivities of other types of technology, such as
computer-aided manufacturing. Much work is needed to design and
produce improved robotic devices that have perfect error recovery
mechanisms, less costly safety procedures, fewer programming steps,
and less indirect effort support. A close link between the systems
designer and manufacturing personnel through early manufacturing
involvement (EMI) in the design phase will also help minimize system
design problems.
Page 117

Figure 4.20 Partial productivity indices for the J-1515 robot PCB task
Page 118

4.7 CASE STUDY: COMPUTER-AIDED MANUFACTURING

IMPACT ON TOTAL PRODUCTIVITY IN PCB ASSEMBLY
TASK

4.7.1 Research Site and Methodology

Data were collected at a manufacturing plant that introduced and used
specific types of computers (J-2000 and J-2000-1) to assemble printed
circuit boards. The computer-aided printed circuit board assembly task
was concerned with the use of a logistical application program to assist
production workers in the insertion of small electronic components, such
as transistors, diodes, resistors, and capacitors, into a blank printed
circuit board. The need for the computer-aided method arose from the
fact that manual insertion of the electronic components was difficult and
time consuming. Both the manual and computer-aided methods of
assembling printed circuit boards were performed in an electrostatic
discharge area.

4.7.2 The Subjects and the Research Sequence

Two difference groups of five subjects each were studied. The first
consisted of five normal subjects (two males and three females) with a
mean age of 32 years (range, 27–40). The second group consisted of
five normal subjects (two males and three females with a mean age of 35
years; range, 26–43). All subjects were selected after passing a physical
examination and after a careful review of their response to the health
screening. In order to ascertain that the research results were not biased
by the effect of the order in which tasks were performed, the research
was designed to test for the effect of the order of performance. In the two
case studies of interest, the participants were divided into two groups. In
the first case study, group 1 performed the manual task initially followed
by the computer task. Group 2 initially performed the computer task
followed by the manual task. The subjects in group 1 were assigned code
letters A, B, C, D, and E. Similarly the subjects in group 2 were assigned
code letters F, G, H, I, and J. In the second case study group 1 performed
the computer task using J-2000 initially, followed by the computer task
using J-2000-1. Group 2 performed the computer task using J-2000-1
initially, followed by the computer task using J-2000. Using a random
selection sequence, the participants were trained to assemble the printed
circuit boards manually and by computer. Following this, data on partial
and total productivities were collected during an actual production period
of ten weeks. The
Page 119

Table 4.18 Research Sequence

Group
Case Study Number GroupTask Sequence
Population

Case Study 1 research Group

Manual task, Computer task (J-2000) 5
sequence 1
Group
Computer task (J-2000), Manual task 5
2
Total 10
Case Study 2 research Group Computer task (J-2000), Computer
5
sequence 1 task (J-2000-1)a
Group Computer task (J-2000-1),a
5
2 Computer task (J-2000)
Total 10

aThe J-2000-1 is a modified version of the J-2000 computer

research sequence is presented in Table 4.18. The task-oriented total
productivity measurement model and the implementation methodology
describe in Section 4.4 was applied.

4.7.3 Results
The results showed that when the J-2000 system was changed to the
J2000-1 computer system there were increases in total productivity and
labor, materials, and energy productivities. The productivities related to
capital, computer operating expense, data processing expense, and
other administrative expenses decreased. The results of the case study
are shown in Figures 4.21 through 4.24.

4.7.4 Computer Systems Problems Encountered During

Implementation
In both computer systems J-2000 and J-2000-1, the computer speed was
fixed. The same Dt was used for types of components. Dt was the time
interval allowed for operators to insert a component into the printed circuit
Page 120

Figure 4.21 Partial productivity indices for the J-2000 computer-aided

task.
Page 121

Figure 4.22 Total productivity values for the J-2000 and J-2000-1
computer-aided tasks.

board. This created a control problem for operators, especially in

situations in which the component lead length and sizes were different.
The logistical application programs of the J-2000 and J-2000-1 computer
systems also malfunctioned. The common errors observed were (I)
feeding an incorrect part to the operator, (2) providing a wrong assembly
sequence, (3) wrong coordinates leading to parts jamming the fixtures,
(4) providing the wrong correction code to the operator, (5) shining a light
beam locator at an invalid coordinate, (6) mechanical breakdown of the
system, and (7) operator-induced error causing the system to be down.
The workers perceived that these systems-related problems created
significant control and interdependence problems that affected their job
satisfaction and caused psychological stress. System design problems
were resolved through three main strategies: (I) involvement of users and
their recommendations in the design stage of the system; (2) modification
of the computer-based systems parameters to allow control for workers,
for example, a variable Dt was provided in the modified computer system
Page 122

Figure 4.23 Total productivity indices for the J-2000 and J-2000-1
computer-aided tasks.

after this investigation recommendation; and (3) computer system

commands, variables, and parameters were enhanced to enable the
system to be user friendly.

4.7.5 Problems Encountered During Implementation

The problems presented here are mainly intended to form a guide to
companies setting up a productivity measurement program for the first
time. It should be noted, however, that the problems associated with
starting a productivity measurement program may vary depending on the
type of production environment. Based on the implementation of the task-
oriented total productivity model at various plants, we found that the
existing data collection system could not provide the input and output
Page 123

Figure 4.24 Partial productivity indices for the J-2000-1 computer-aided

task.
Page 124

components needed for the TOTP model. A computer program was

developed to enable us to collect input and output by task at the time of
production. A session was held with the cost accounting department; this
resulted in a slight modification of the cost accounting system. As with
any other such study, employees have the initial impression that a study
brings layoffs, change in procedures, and other problems. It was not
unusual for us to notice similar feelings and a resistance to change at the
beginning of our study, but these faded eventually as the objectives of
our study were communicated to and supported by both management
and employees. Initially, data collection was very difficult because we had
to rely on specific persons who had to add the task of helping in data
collection to their normal duties. The team work approach adopted to
implement the model eliminated the ‘‘it’s not my problem” syndrome.
Specific tasks were assigned to specific people, and meetings were held
regularly to discuss and resolve potential problems.

4.7.6 Productivity Measurement Project Maintenance

Validation of a total productivity measurement model takes into account
all the measurable factors of input and output. Although the model was
found to be sensitive in the various test cases of the printed circuit board
assembly tasks, a potential exists for the application of the model in other
types of tasks performed in both manufacturing and service
organizations. However, minor modifications will have to be made in
model notations and data collection instruments. A computer program is
also available to ease the computational burden.

In order to maintain the productivity measurement program once it has

already been established using the task-oriented total productivity model,
the following are needed: (1) data should be collected periodically; this
will depend upon whether the productivity indices are established on a
monthly, quarterly, or yearly basis; (2) productivity indices are computed
for each task and for the firm and an analysis of the trends for specific
areas to be investigated for improvement; (3) tasks are compared in the
same base period; (4) development of historical data on new tasks to
permit sales, costs, and profit analysis before the tasks are introduced to
the productivity measurement program; (5) productivity trend patterns
should be compared with the actual profit figures by period; and (6)
training sessions should be conducted with the key personnel in the
various departments that will be involved in the maintenance of the
productivity measurement program.
Page 125

4.7.7 Conclusions
This is perhaps the first research that has investigated the impact of
computer-aided manufacturing on total productivity. More work needs to
be done in understanding the full implications of computer-aided
manufacturing on productivity other than the one environment studied.
The task-oriented total productivity measurement utilized in the case
studies can also be applied in other types of tasks with minor
modifications in the data collection instruments. Based on the findings of
this research, system designers and managers of automated tasks are
provided with the following recommendations. (1) Involve all potential
users of computer-based systems during the design phase. (2) Provide
flexibility on computer-based systems that allows a stress-free human/
computer interface. (3) Provide the ability to advise, alert, or warn users
of potential events on the computer-based systems. (4) Evaluate the
system performance to decrease costly additional safety and operational
procedures. (5) Evaluate the system performance for cost minimization in
energy, capital, data processing, and indirect effort supervision costs.

4.8 TECHNOLOGY-ORIENTED TOTAL PRODUCTIVITY

MEASUREMENT SYSTEM

In this era of technological explosion, companies are faced with the

challenge of how to maintain technological leadership and a competitive
edge, increase revenue, diversify products, keep abreast of the market
place, and provide the best possible technology for the customer.
However, the life cycle of the new technologies has continued to be
shortened from about a 10-year span in 1960 to about a 2-year span in
1986. How to respond to the short life cycle of technology and manage it
for productive growth is a significant issue. Edosomwan (1986) pointed
out that one way to do this is through a careful understanding and
management of the input-output relation in the stages of the technology
life cycle. Following this, developing and implementing a technology-
oriented productivity measurement system can have the following
benefits.
1. A technology-oriented productivity measurement system improves
resources planning for all phases of the technology life cycle. It
provides common measures and concepts to compare similar or
different types of technology.
Page 126

1. Technology-oriented productivity measurement systems create the

awareness required for effective supervision of all actions to be
taken and improves decision-making through better understanding
of the actions already taken to address a given problem in each of
the phases of the technology life cycle.
2. Technology-oriented productivity measurement systems provide a
basis for the firm to make decisions on when to phase out a given
technology. The productivity values and indices provide a way of
detecting deviations from established standards on a timely basis
so that something is done about such deviations. In situations in
which the performance of the work groups, technology, tasks,
customer, departments, projects, and the firm as whole is to be
measured, the technology-oriented measurement system can be
implemented with minor modifications for the definition of inputs
and outputs and allocation criteria for overhead expenses. The
major significant difference between previous productivity models
and the technology-oriented total productivity measurement model
is that it recognizes a new technological version in which
development expenses, retraining expenses for new technologies,
computer operating expenses, and robotic operating expenses are
important additions to the input components. New ideas and other
associated values are considered output components. Also,
productivity is measured in all phases of the technology for the first
time. The measures derived from this model are in the form of an
index obtained by considering all phases of the technology life
cycle shown in Table 4.19. The input and output components of
the TOTPM model are shown in Figures 4.25 and 4.26. The key
definitions associated with the TOTPM model are as follows:
Page 127

Table 4.19 Technology Life Cycle Phase

1. Project 4. Manufacturing
Phase proposal study verification,
description and definition 2. Design 3. Development production, and
of Ideas sales

Verify
Determine
Refine manufacturing
feasibility, Finalize
specifications, capability;
requirements, specifications
build models, produce, deliver,
initial costs, test
End define market and install;
specifications manufacturability,
objective at support and verify continue to
cost, release for
each phase costs revenue and forecast future
quantities, and announcement,
profits, commit demand; produce
estimated and commit price
ideas and model until loss of
revenue and and revenue
to marketing demand indicates
profits
end of life
Labor, material
Capital, energy
Computer
Development Development operating
Labor expenses expenses, expense
Significant expenses Labor, materials Labor, capital, Robotic
input Other Capital Energy material Energy operating
componentsadministrative Other Other expense
expenses administrative administrative Retraining
expenses expenses expenses
Other
administrative
expenses
Partial units
produced
 Finished unit Finished units
Finished model
Significant New ideas in prototype Partial produced
Partial model in
output monetary unit prototype in Other output
monetary terms
componentsterms ($value) monetary terms associated with
($value)
($value) units produced in
monetary terms
($ value)
Page 128

Figure 4.25 Input components considered in the technology- oriented

total productivity measurement model.

Figure 4.26 Output components considered in the technology- oriented

total productivity measurement model
Page 129

4.8.1 Notations for the Derivation of Productivity Values and

Indexes
Let

i = technology type (i = 1,2,3, . . .,m)

j = technology life cycle phase (j = 1,2,3,4)
k = technology development-manufacturing-service site (k = 1,2,3, . . .,p)
t = study period (t = 1,2,3, . . .,p)
TCIijkt total value of new ideas of type i, produced in phase j, in site k, in
= period t
FMPijkt total value of finished model and prototype of type i, produced in phase
= j, in site k, in period t
PMPijkt total value of partially completed model and prototype of type i,
= produced in phase f, in site k, in period t
FUPijkt total quantity of finished units of technology of type i, produced in
= phase j, in site k, in period t
PUPijkt total quantity of partial units of technology of type i, produced in phase
= j, in site k, in period t
PCTijkt percentage completion of partial units of technology of type i, produced
= in phase j, in site k, in period t
SPTijkt base period selling price per unit for a unit of technology of type i,
= produced in phase j, in site k, in period t
TOTijkt total quantity of output of technology of type i, produced in phase j, in
= site k, in period t
DETijkt development expense input in monetary terms utilized to produce
= technology of type i, in phase j, in site k, in period t
LRTijkt labor hours utilized to produce technology of type i, in phase j, in site k,
= in period t
LRRijkt labor rate per hour utilized to produce technology of type i, in phase j, in
= site k, in period t
METijkt materials and purchase part expense utilized to produce technology of
= type i, in phase j, in site k, in period t
capital-related expense (includes fixed and working capital, such as
CETijkt cash, accounts receivable, tools, plant, and buildings) utilized to
= produce technology of type i, in phase j, in site k, in period t (capital is
computed using lease value concept)
Page 130

energy-related expense (includes electricity, solar energy, water, coal,

EETijkt
and gas); input utilized to produce technology of type i, in phase j, in
=
site k, in period t
CREijkt varialble computer-related expense input utilized to produce technology
= of type i, in phase j, in site k, in period t
RREijkt variable robotics-related expense input utilized to produce technology of
= type i, in phase j, in site k, in period t
OFTijkt variable expense from other forms of technology utilized to produce
= technology of type i, in phase j, in site k, in period t
RETijkt retraining expense utilized for technology of type i, in phase j, in site k,
= in period t
OETijkt other administrative expense utilized to produce technology of type i, in
= phase j, in site k, in period t
base period time, the reference period to which output and input in
TBT$ = monetary terms is reduced; thus, the total productivity of a task
expressed as dollar output per dollar input in constant dollars
TPTijkt
total productivity of technology of type i, in phase j, in site k, in period t
=
TFTijkt total factor productivity of technology of type i, in phase j, in site k, in
= period t
PPTijkt partial productivity of technology of type i, in phase j, in site k, in
= period t
OOTijkt other output associated with units produced of technology of type i, in
= phase j, in site k, in period t
TITijkt total input utilized to produce technology of type i, in phase j, in site k,
= in period t
The total and partial productivities are expressed as follows:

Page 131

Partial productivity considers only one input factor. Total factor

productivity considers only labor and a capital input factor. For example,
partial productivity with respect to labor input is expressed as

where LRTijkt and LRRijkt are labor terms.

4.8.2 Allocation Criteria for Overhead Expenses

The following allocation criteria are suggested.

1. Complexity factor criteria. The complexity of the technology,

product, or task is used to determine a proportional contribution to
the total quantity produced. Complexity in this case means such
items as the number of assemblies within a given technology, the
insertion rate, and the kitting time.
2. Quantity produced proportionality criteria. The proportional
contribution to total quantity produced is used to allocate overhead
expenses. This is applicable in situations in which there is more
than one type of technology, product, or task.
3. Direct hours allocation criteria. This approach requires daily direct
labor recording and the derivation of burden rate from net expense
and direct hours. Therefore, the cost of a product includes labor
and burden. Allocation of overhead is done using direct hours and
one burden rate.

4.8.3 Implementation Methodology

The implementation steps for the technology-oriented total productivity
measurement (TOTPM) model are briefly described in Figure 4.27. A
teamwork approach among departments, managers, and employees is
recommended to facilitate better productivity measurement.
Page 132

Figure 4.27 Implementation steps for the TOTPM model.

The implementation steps presented in Figure 4.27 are based on the two
case studies presented in this chapter. Additional work may be required
depending on the type of technology, organizational environment, and
data collection system already available.

4.8.4 Case Studies: TOTPM in Two Technology Producing

Companies
The TOTPM model was used to measure and compare the productivities
of types of technology in an organization that produces technology to
Page 133

customer order. The first case study involved a situation of a computer

technology monitored throughout its life cycle. The second case study
involved a situation of a robotic device technology monitored throughout
its life cycle. In both case studies, two phases of each technology type
were analyzed and studied. Historical data on input and output were
used, especially in the development and project proposal phases. The
implementation methodology specified in Figure 4.27 was followed.

Results and Discussion

As shown in Figures 4.28 and 4.29, the TOTPM model enabled us to
compare the total productivity indices of two types of computers and
robotic devices in different stages of their life cycles. By examining the
total productivity trend of the model C212JX computer over its life cycle,
improvement actions were put in place to improve the performance trend
in model C212JXY. Similar actions were taken for the robotic device
models NM-70X and NM-70X In both technologies, the series of
engineering changes (EC) and specification revisions had a significant
nega-

Figure 4.28 Total productivity indexes for C212JX and C212JXY

computers.
Page 134

Figure 4.29 Total productivity indexes for robots NM-70X and NM-70Y.

tive impact on productivity. Phase I of C212JX and C212JXY was

significantly affected by labor productivity. In both technologies, energy
expense, computer operating expenses, robotic operating expense, and
other administrative expenses influenced the total productivity in all
phases.

Problems Encountered During Implementation

Data collection and tracking were the greatest problems encountered
during implementation. Because of the various phases involved in the
technology life cycle, a large data base had to be set up to collect all the
input and output components needed for the TOTPM model. A computer
program was written to compute the values needed for the computation
of productivity. In the proposal design and development phases, it was
somewhat difficult to identify the contribution of a given input to the output
obtained. This problem was resolved through an appropriate tracking
mechanism implemented to record input and output elements.
Resistance to the productivity measurement program was overcome
through a teamwork approach. Sessions were held to explain the
purpose and
Page 135

benefits of the study to everyone. It must be pointed out that the

problems encountered during implementation may vary from one
organization to another depending on technology types, the
organizational climate, and other factors.

Conclusion
This may be the first attempt to develop and implement a technology
oriented total productivity measurement model that recognizes all phases
of technology life cycle stages and total measurable input and output
components. The model has also been proven to be sensitive in the two
cases presented. For existing companies trying to implement this type of
measurement system, it is suggested that they begin with detailed
analyses of technology input and output and historical data for at least 2
years. New companies have the advantage of proceeding immediately to
appropriate tracking of the technology input and output elements. The
TOTPM model is a powerful model with strong potential for application to
various product groups, tasks, and projects in both manufacturing and
service organizations. For each potential implementation case, minor
modification may have to be made in data collection instruments. The
TOTPM model can also be used for product and technology equipment
selection. Application of the model calls for ongoing data collection,
computation, comparison monitoring, and analysis of productivity trend
patterns. Only in such situations do firms realize the optimum benefits for
the use of the model in a productivity measurement program.

4.9 THE COMPREHENSIVE PRODUCTIVITY

MEASUREMENT MODEL

Both the task-oriented and technology-oriented total productivity

measurement models can be extended to a comprehensive productivity
measurement (CPM) model. The CPM model will have to take into
account subjective factors, such as the impact of motivation on
productivity and other intangibles. The CPM model is only recommended
in situations in which there are meaningful approaches for quantifying the
intangibles of input and output components. Weighting schemes for
factors that affect input and output and managerial judgment are often
used to quantify intangibles.

The next chapter discusses how statistical process control can be a

valuable tool for improving productivity and quality.
Page 136

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Page 138
Page 139
Chapter 5
Productivity and Quality Improvement Through Statistical
Process Control

This chapter presents the concepts and techniques of statistical process

control (SPC) and its usefulness in improving productivity and quality in
the business environment. A step-by-step methodology for implementing
SPC and the design of the experiment are presented. A case study that
shows the application of the SPC technique in a group technology
production environment is presented. A procedure for designing an
experiment is also offered. Statistical tools for data analysis are
described.

5.1 PROCESS CONTROL DEFINITION

Process control is a state whereby statistical inference techniques are

used to monitor and control a specified process in order to achieve
improved quality and gains in productivity. The control concept utilizes
both historical and present technical knowledge of the process in
understanding cause-and-effect relationships combined with statistical
techniques to control and minimize defects. The implementation of
process control concepts and techniques is achieved by providing a
control system for defect and error detection, a control system for defect
and error analysis, and a control system for defect and error correction.
Page 140

5.2 A PROCESS CONTROL SYSTEM DEFINITION

A process control system is a feedback mechanism that provides

information about the process characteristics and variables, process
performance, action on the process inputs, transformation process, and
action on the output. The major components of a process control system
are presented in Figure 5.1.

Figure 5.1 Components of a process control system.

Page 141

5.3 THE KEY REQUIREMENTS OF PROCESS

MANAGEMENT

In order to improve the quality of products or services from a process, the

following basic requirements are necessary.

1. The management philosophy must be one that is geared toward

continuous quality improvement at the source of production or
service. Process control is not a one-time action. It is a continuous
feedback mechanism that involves both management and
employees in producing good products and services.
2. There must be a system for measurement, control, evaluation,
planning, and improvement.
3. There must be a data base for the storage, retrieval, and access of
information about the process.
4. There must be a clear definition of process parameters and
variables. Input and output elements must be clearly identified.
5. All process parameters must be characterized with complete
understanding of repeatability and variability.
6. There should be process ownership by everyone involved in the
management process.
7. Management philosophy must be that no level of defect is
acceptable.
8. Quality improvements from key process control actions must be
documented and rewarded on a timely basis.
9. The management information system for process control must
provide a real-time feedback mechanism to everyone involved in
the quality improvement effort.
10. There should be provision for ongoing training in process control
techniques.
11. The attainment of a good quality product should be through the
 prevention of defects, not through the detection of defects.
12. The removal of defects from a process should be done through
root cause analysis and the implementation of proper corrective
action. Costly inspections should be discouraged. The strategy
should utilize sampling inspection when necessary and no
inspection when not warranted.
Page 142

5.4 BENEFITS OF THE PROCESS CONTROL

MANAGEMENT SYSTEM

The competitive business environment demands a better quality product

or service at the existing price or at a lower price. As a result, quality and
productivity improvement through process control has emerged as a
major new business strategy in many organizations. The strong
emphasis on quality is driven by a number of reasons, including the
following.

1. The acceptance of products produced or services rendered relies

on conformance to requirements or specifications, which means all
output must be defect free.
2. Quality improvement increases productivity.
3. The cost of production or services is increasing.
4. Product liability may lead to a loss in the market share.
5. Consumer education and awareness of quality are increasing.
6. There is intensive global competition in all industrial sectors.

In order for organizations to effectively offer good quality products and

services that will compete in the world market, it is necessary for them to
institute a statistical process control system. Such a system can have the
following benefits:

1. Facilitates process capability improvement. It helps in determining

the root cause of a problem and monitoring of corrective actions
2. Facilitates increases in productivity through control of rework,
machine downtime, scrap, and work-in-process inventory
3. Provides a basis for both management and employee to
 understand and control assignable causes that affect a process
performance
4. Facilitates the minimization of the ‘‘cost of quality,” the expense of
doing things right the first time
5. Creates a basis for effective control and understanding of the
complex interaction among production and human variables, such
as machines, fixtures, materials, and human work habits and
efficiency
6. Facilitates improvements in quality yield and reduction in product
cycle time
7. With tools, such as control charts, provides a common language
for communications about the performance of a process
Page 143

5.5 IMPLEMENTATION STEPS FOR STATISTICAL

PROCESS CONTROL

The implementation of statistical process control concepts and

techniques requires good control tools for performance and process
adherence, clear understanding of supplier specifications, a timely
reaction to problems within the process, a dedicated team effort to
address process problems on a timely basis, and management
commitment to quality and productivity improvement through process
control. Each step for implementing statistical process control shown in
Figure 5.2 will now be described.

5.5.1 Familiarization Sessions with Personnel, Processes,

Technologies, Supplier Specifications, and Consumer Requirements
In this step, a formal study and understanding of the production or
service processes, procedure, information system, data collection
system, and product mix with associated technologies should be
obtained. All input to the process and detailed understanding of supplier
specifications should be obtained. A team of experts in statistical control
concepts should review all the specifications and streamline them for the
specified processes. A meeting should be held to introduce the purpose
of the statistical process control in the work environment. It is usually
helpful to demonstrate management commitment through participation in
the kickoff meeting or through a memorandum of support. The key
elements involved in this step are shown schematically in Figure 5.3.

5.5.2 Classification of Production or Service Process into Sector

Cells
The production or service processes should be divided into sector cells.
The cells should have the property of being able to process a family of
products or services that share at least one common property, design or
production or both. Other factors to consider are the work flow pattern,
the source of delivery of raw materials, the ability to obtain a balanced
process through a line balancing approach, and the interdependencies
among variables and sector cells. The elements involved in this step are
shown schematically in Figure 5.4.
Page 144

Figure 5.2 Steps for implementing statistical process control

5.5.3 Input and Output Analysis for Each Sector Cell

In order to understand the characteristics of all production and service
variables, input and output analysis of each cell is performed. The
significance of each task performed and the characterization of both
Page 145

Figure 5.3 Elements involved in statistical process control familiarization

sessions.

Figure 5.4 Elements involved in sector cell classification.

Page 146

equipments and processes are obtained. For example, equipment

characterization should consider such items as variables that affect
machine output, machine capability (uptime and downtime of machine),
output per hour, and repeatability of machine problems. Process
characterization should consider such items as the incoming quality of
products, the impact of multiple products on one machine, process yields,
and human/machine interface problems. The emphasis should be to
determine the variables that affect process output and their effects on
each sector cell and the total combination of cells. This will enable us to
understand how each variable in each cell can be controlled. In situations
in which the sector has a strong reliance on perishable items, the total
time for each perishable good to become waste should be obtained. The
elements involved in this step are shown schematically in Figure 5.5.

5.5.4 Development of a Measurement Method for Variables

The primary emphasis should be on the use of control charts in the
understanding and reduction of fluctuations in a process until they are in
a state of statistical control at the level desired.

Control Chart Definition

Control charts are a statistical device used for the analysis and control of
repetitive processes. They are used to study variations in a process that
are attributed to special causes. There are two types of control charts
used to study variation in a process.

Attribute Control Charts. Control charts measure whether the product is

defective based on a number of quality characteristics. The attribute
control chart can be classified into different types; some examples are
discussed below.

P chart (percentage defective) is based on attribute data (number of

defective units of product). It is used to control the overall defective
fraction of a process. The P chart provides an overall picture of quality
and is often based on data from inspection records. However, it does not
provide sufficient information for the control of individual characteristics. It
does not provide information on the different degrees of defectiveness in
the units of a product.
Page 147

Figure 5.5 Elements involved in input-output analysis.

C chart (number of defects) is based on attribute data (number of

defects per unit of product). It is used to control the overall number of
defects per unit. It provides a measure of defectiveness based on data
from inspection records. However, it does not provide sufficient
information for the control of individual characteristics.

The measurement methods for the various types of attribute control

charts are presented in Table 5.1.

Variable Control Charts. These are control charts that measure the
degree in variation of a single quality characteristic, such as tolerances or
temperature. The in Table 5.2 shows variations in the averages of
samples. R charts show variations in the range of samples. Both the
average (X) and range (R) charts are primarily used to control individual
characteristics. These charts cannot be used with go or no go data.
These charts are helpful when detailed information on the process
average and variations are needed for the control of individual
dimensions. Examples of the sample size usually used for each type of
control chart are specified in Table 5.2. The work forms for both variable
and attribute control charts are shown in Appendix B.
Page 148
Page 149

Table 5.2 Sample Size for Attribute and Variable Control Charts

Average and Range (R) % Defective (P) Number of Defects (C)

Sample Usually 4 Samples of 25, 50, Unit or product;

Size or 5 or 100 from example, one printed
inspection results circuit board

5.5.5 Data Collection Design and Data Base for Statistical Process
Control Information
In this step various forms and instruments are designed to capture the
input and output components needed for statistical process control in
each sector cell. In designing these forms, various factors, such as
frequency of data collection, information required, computation steps,
scale of measurement, and clarity, should be considered. An example of
a measurement form for a variable control chart calculation is shown in
Table 5.3. Blank work forms for data collection are shown in Appendix B.
A data base should be set up for the storage and retrieval of information
on process performance at each sector cell. Personal computers are
useful systems for data base management.

5.5.6 Personnel Training and Testing of Data Collection Instruments

In this step, personnel associated with the implementation of statistical
process control in each sector cell should be trained. An example is
shown in Figure 5.6.

5.5.7 Data Collection, Synthesis, and Computations

In this step, the various forms designed in Section 5.5.5 are used to
collect process yields, input and output components, and other measures
for each sector cell. The data are collected periodically and synthesized
and then used to Compute the control limits and process averages for
each sector cell, product type, and specific quality characteristic of
interest. The elements involved in this step are shown schematically in
Figure 5.7.
Page 150

5.5.8 Interpretation for Process Control and Capability

The process yields (defects, process averages, upper control limit, and
lower control limit) of each sector cell are analyzed periodically to
determine why they increased or decreased. Emphasis should be placed
on understanding the pattern of variation and pinpointing assignable
causes for the variation within the process.
Page 151

Figure 5.6 Elements to be considered in statistical process control

training,

Figure 5.7 Elements involved in data collection, synthesis, and

computations.
Page 152

Understanding Process Patterns of Variation

As a process of any system operates over a period of time, typical
patterns develop. It is important for the process control analyst to
recognize these patterns for better interpretation and analysis of process
problem root causes. The fourteen most common types of patterns are
now presented.

Trend. A cumulative trend usually consisting of seven or more

consecutive points indicates that the process is drifting. The pattern may
be a gradual rise or fall to either portion of the control chart. The possible
root cause of the trend may be tool wear, depletion of reagent, or a
decline in human efficiency owing to fatigue. This pattern is shown
schematically in Figure 5.8.

Lack of Stability. This pattern reflects a high level of large fluctuations

within the process. The possible root causes of the fluctuations may be
over adjustment of process parameters, such as material, tools, and
equipment, and over control of the process. This pattern is shown
schematically in Figure 5.9.

Sudden Shift in Level. A qualified process will experience a sudden shift

in level if new equipment, new operators, or new materials are introduced
to the process. A difference in product mix and configuration may also
shift the process level. This pattern is shown schematically in Figure
5.10.

Points Warning. When points are outside the upper or lower control limit,
a special assignable cause is often responsible, for example, a high level
of machine misinsertion within a given time period or a lack of operator
training for a given task. This pattern is shown schematically in Figure
5.11.

Cycles. Differences among work shifts, operators, temperature, and other

factors may result in a consistent pattern of repeated low and high points
that occurs periodically almost within the same time intervals. This
pattern is shown schematically in Figure 5.12.
Normal. A normal pattern occurs within the control limits and is usually
based on random variation. This pattern is shown schematically in Figure
5.13.

Occasional Freaks. This are points that occur outside the control limits
with no consistent pattern. Freaks are usually caused by the interaction
of multiple factors, which is difficult to analyze. The best source for
pinpointing the root causes for freaks is in the design of the experiment.
This pattern is shown schematically in Figure 5.14.
Page 153

Figure 5.8 A typical trend pattern in statistical process control.

Figure 5.9 Lack of stability pattern in statistical process control.

Figure 5.10 Sudden shift in level pattern in statistical process control.

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Figure 5.11 Points warning pattern in statistical process control.

Figure 5.12 Cyclic pattern in statistical process control.

Figure 5.13 Normal pattern in statistical process control.

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Figure 5.14 Occasional freaks pattern in statistical process control.

Natural Pattern. The process is fairly stable with no significant variation.

The state of control is maintained consistently over time. This pattern is
shown schematically in Figure 5.15.

Runs and No Runs. This pattern indicates too many points or too few
points on one side of a control chart center line. This pattern could be
caused by using the wrong specification for production, such as wrong
equipment parts. An example of this pattern is shown Figure 5.16.

Predictable Change. This pattern shows a point-to-point variation that is

easily identified. The variation is usually caused by a similar or the same
cause, such as the level of tool wear. An example of this pattern is shown
in Figure 5.17.

Stratification. These are unnaturally small fluctuations that often appear

around the center line of control charts. Figure 5.18 shows this type of
pattern.

Mixtures. A. few points near the center line of the control chart show a
seesaw effect. This pattern is usually caused by differences among
sources of material and types, different training levels between operators,
multiple machines, multiple tools, and two different temperatures. This
pattern is shown schematically in Figure 5.19.

Cyclic Shift in Level. This pattern occurs when items, such as new
material, are introduced to the process at the same time internally or
seasonally. A seasonal variation in humidity and temperature levels as it
affects tools and equipment within the process can also cause this
pattern, shown in Figure 5.20.
Page 156

Figure 5.15 Natural pattern in statistical process control.

Figure 5.16 Runs and no runs pattern in statistical process control.

Figure 5.17 Predictable change pattern in statistical process control.

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Figure 5.18 Stratification pattern in statistical process control.

Figure 5.19 Mixed pattern in statistical process control.

Figure 5.20 Cyclic shift in level pattern in statistical process control.

Page 158

Systematic Variables Skip Repeat. This pattern is characterized by a

predictable point-to-point variation that occurs within a given time
internal. The predictable point-to-point variation often follows a different
steady-state level in the subsequent time periods. This pattern is shown
schematically in Figure 5.21.

Evaluating Process Runs

In order to properly evaluate runs, the control chart is divided into zones.
Each zone is 1 standard deviation wide. Between the upper and lower
control limit are a total of 6 standard deviations. The center line shown in
Figure 5.22 divides the control chart into two equal zones of 3 standard
deviations each. As stated by Juran and Gryna (1980), process instability
is determined by the following:

1. A single point falls out 3 standard deviation limits (beyond zone A).
2. Two of three successive points fall in zone A or beyond (the odd
point may be anywhere).
3. Four of five successive points fall in zone B or beyond (the odd
point may be anywhere).
4. Eight successive points fall in zone C or beyond.

Figure 5.21 Systematic variable skip repeat pattern in statistical process

control.
Page 159

Figure 5.22 Zones for applying tests for instability. (Adapted from Juran,
J. M., and F. M. Gryna, 1980. Quality Planning and Analysis, McGraw-
Hill, New York, p. 340. Reprinted with permission.)

Evaluating the Process Capability

The most generally used approach for evaluating the capability of
process to satisfy customer requirements in the C ± 3s capability where
C is the process average (center line) of the control chart. C ± 4s often
used for new processes. These requirements are often based on a
minimum performance level that has relative consistency within a product
mix and other quality characteristics. There are situations in which the
producer may wish to tighten the process capability requirements in order
to satisfy a particular customer’s demand. However, it is recommended
that a trade-off analysis be conducted before changing the capability
limits for an entire production output.

5.5.9 Improve Process Capability Through Analysis of Problem

Root Causes
In this step the sector cell team members meet regularly to analyze the
patterns of the process based on the data collected. The team focuses
on assignable causes that are responsible for process performance. The
root causes of problems are sought and improvement actions
implemented to correct problems. It is recommended that when new
improvement actions are implemented, they should be tracked carefully,
to monitor the impact on process performance. The elements involve in
this step are shown schematically in Figure 5.23.
Page 160

Figure 5.23 Elements involved in process analysis for problem root

causes.

5.5.10 Ongoing Process Control Monitoring

Statistical process control requires an ongoing process that emphasizes
quality at the source of production. The prevention system for defects is
necessary. All key actions implemented within the process must follow a
means of de-emphasizing the detection and reaction system. Corrective
action strategy requires total team involvement and commitment. There
should be assigned tasks with responsibility and accountability. The key
elements involved in this step are presented in Figure 5.24.

5.6 BASIC CONCEPTS FOR DESIGNING EXPERIMENTS IN

THE BUSINESS PROCESS ENVIRONMENT

It is often difficult in certain situations to be able to pinpoint the causes of

variation within a given process because of abnormal conditions that may
be the result of a number of different factors. Experiments are carried out
to achieve the following:

1. Provide information and facts needed for the prediction of a

process behavior and performance.
2. Discover something about controllable factors and uncontrollable
variables in a particular process.
Page 161

Figure 5.24 The key elements in ongoing process control management.

1. Compare the effect of several factors on some phenomena.

2. Identify root causes of assignable causes of given problem within
a process.
3. Provide information needed for the prediction of an improvement
action or process change within a given process.

5.6.1 Three Basic Principles of Experimental Design

The three basic principles of experimental design are as follows.

Replication involves repetition of a basic experiment. The experimental

error can be estimated, and a sample mean can be a useful tool to obtain
a precise estimate of parameters.

Page 162

Randomization involves the allocation of the experimental material and

the order in which an individual runs the experiment. These are randomly
determined.

Blocking involves making comparisons among the conditions of interest

in the experiment within each block. It is used to increase the precision of
an experiment.

The key principles and terminology associated with experimental design

are shown schematically in Figure 5.25.

Figure 5.25 Principles and terminology in experimental design.

Page 163

5.6.2 Requirements for a Successful Experiment

As discussed in Section 5.5, understanding the assignable causes for a
process pattern is not any easy task. Experiments that aid in the
interpretation and understanding of the root cause problems of a process
must be based on the following.

1. The experiment must be based on an efficient design that

recognizes all process variables and parameters.
2. The experiment must process no systematic error in the execution,
design, and implementation phases.
3. The experiment must use homogeneous materials and have
control mechanisms in place for extraneous factors.
4. The experiment must have an acceptable experimental error, and
the results obtained must be statistically significant.
5. The conclusions drawn from the results of the experiment must
have a wide range of validity and application.
6. The data obtained from the results of the experiment must lend
themselves to statistical analysis.
7. The controlled environment of the experiment must be clearly
specified and all inferences drawn must be limited to this or a
similar environment only.

5.6.3 Steps in Designing a Process Experiment

A ten-step approach for designing experiments is specified in Figure
5.26. Each step will now be described.

Step 1. The process problem and area of impact are identified. Historical
evidence of the existence of a problem or estimate of trends to support
the definition of a problem must be provided. Other interrelated variables
that need further clarification must also be specified.

Step 2. The specific problem statement is translated to a null and

alternative hypotheses to enable the data obtained to be analyzed
statistically.

Step 3. The planning and implementation of the experiment will be

successful if all personnel involved in the problem area of impact have
involvement in specifying variables, factors, and parameters. This
provides a clear idea of what is studied, how all relevant information is
obtained, and the usefulness of the result of the experiment. The
resources
Page 164

Figure 5.26 Steps in a designing process experiment.

Page 165

needed to perform and implement the results of the experiment are also
easily obtained through cooperation from everyone involved.

Step 4. In this step a distinction is made between quantitative and

qualitative factors, dependent and independent variables, and the range
over which all factors and variables are selected. Other parameters, such
as the number of levels of runs and factor interaction, are selected.

Step 5. All dependent variables are clearly specified. Dependent

variables and other variables must be selected based on facts, not
opinions. The measurement methods for each variable should be
specified.

Step 6. It is important to note that complicated experiments are

expensive in terms of both increased possibility of error and increased
cost. It is recommended that experimental design be keep as simple as
possible. The choice of experimental design must be based on the
following factors: cost, time, risk, accuracy level, and the true response
range of all resources needed for the detection of causes assignable to
the problem being investigated.

Step 7. In this step, particular attention must be paid to randomization,

measurement accuracy, and maintaining as uniform an experimental
environment as possible. Appropriate measurement instruments are
designed for data collection with a random check on the validity of data
source and frequency.

Step 8. Data should be collected periodically based on the specified time

table for the experiment. The data should be synthesized and all
unnecessary information weeded out.

Step 9. In this step, statistical techniques, such as the analysis of

variance (ANOVA), and other simple tools, such as mean and variances
are used to analyzed the data collected from the experiment. The
techniques must be able to specify the range of validity or significance of
the results obtained from the experiment. The statistical technique used
must be able to show a confidence interval for results. Computer
programs and graphic analysis techniques should be employed when
applicable to eliminate tedious manual computations.

Step 10. The conclusions and recommendations from the experiment

must be drawn from the results obtained. The practical significance and
implication of the results and findings must be clearly stated.
Recommended actions to resolve the problem investigated must be
specified. The exposures and limitations of findings and
recommendations must be pointed out to avoid further problems when
solutions are implemented. The scope for further investigation should be
identified to enable continued further analysis of improvement in the
process. Managerial judgment
Page 166

is necessary to make trade-offs in situations that involve risk, accuracy

level, cost factors, and other variables.

5.7 CASE STUDY: STATISTICAL PROCESS CONTROL IN A

GROUP TECHNOLOGY ENVIRONMENT*

The statistical process control implementation steps presented in Section

5.5 were applied in a manufacturing plant that produces printed circuit
boards to customer order. The entire production process from raw
materials to finished goods was divided into four group technology cells.
The manufacturing process methods were revised to enable complete
cell balance based on production parameters.

For each cell, control charts and measures were developed to monitor
the process performance and yield. A computer data base was
developed for each cell. Within each cell both process and system
enhancement was made. The results obtained after the implementation
of statistical process control in each cell is shown in Figures 5.27 through
5.30. In addition to the significant improvement in quality in each group
technology cell, it was observed that partial productivity (labor
productivity) in each cell increased significantly after the implementation
of statistical process control.

Other benefits obtained were a reduction in cycle time and inventory

improvement in the percentage of goods conforming printed circuit
boards, less rework, and a reduction in setup time. The production
planning process for the entire group technology environment also
became easier after the implementation of statistical process control.
Statistical process control made possible a clearer understanding and
prediction of the parameters and variables in each production cell.

5.7.1 Problems Encountered During Implementation

The problems presented here are mainly intended to form a guide for
companies implementing statistical process control in a group technology
environment. It must be pointed out that problems associated with
statistical process control in a GT environment could vary depending on
Adapted from Edosomwan, 1986
Page 167

Figure 5.27 Statistical process control result from group technology cell
1.

the organizational setting and production environment. Based on the

case study presented, we found that incoming product quality posed a
significant problem at the machine level. This problem was resolved by
characterization of products by vendors and front-end screening before
these products were allowed in each GT cell.

The vendors were made to take responsibility for the correction of

incoming defects. Grouping the processes, machines, products, and
other factors into group technology (GT) cells would be a tremendous
task. To overcome this problem, a teamwork approach was used in the
cell balancing requirements. This also enabled any resistance to the
study to fade away. Data collection, compilation, and computation were
also found to be cumbersome. A computer program was developed for
this purpose that eased the data management burden. The
characterization of
Page 168

Figure 5.28 Statistical process control result from group technology cell
2.

each GT cell required a flexible work schedule driven by high customer

demands for existing products. This problem was overcome through a
rotational work schedule among people and departments. Initially, a crisis
developed when a problem in a particular GT developed without a clear
understanding of the cause or of who and what was responsible. To
overcome this problem, specific tasks were assigned to specific people
and meetings were held regularly to discuss and resolve problems in real
time. Training was provided for both management and employees to
facilitate good root cause analysis for problems and implementation of
corrective actions.

The group technology approach to production management is a

technique that will become increasingly important in the era of
technological
Page 169

Figure 5.29 Statistical process control result from group technology cell
3.

explosion. GT by itself does not offer a greater advantage than other

traditional approaches. However, with the implementation of statistical
process control in the GT environment, tremendous benefits and
potentials exist in productivity and quality improvement. The concept of
statistical process control in a GT environment is also still in its early
stages of testing and implementation. More work is still needed to provide
a systems-based approach for controlling and managing the parameters
within each GT cell. The case study followed an approach that has a
wide range of applications in various GT groups, including CAD/CAM
robotics. Success in the use of the approach suggested depends in part
on management and employee commitment to excellence through quality
and productivity improvement at the source of production.
Page 170

Figure 5.30 Statistical process control result from group technology cell
4.

5.8 BASIC STATISTICAL TOOLS FOR DATA ANALYSIS

Statistics provides useful scientific procedures for collecting, describing,

organizing, summarizing, and analyzing quantitative information on any
type of problem that may be encountered within any economic unit.
Additional benefits that may be obtained from statistical analysis are
shown schematically in Figure 5.31. Following this, some of the most
commonly used statistical tools are presented.
Page 171

Figure 5.31 Benefits of statistical analysis.

5.8.1 Frequency Distributions

A frequency distribution is a technique that enables the adequate
description of data based on the frequency of occurrence of the different
values of the variables. There are two types of frequency distribution: (1)
a frequency distribution based on ungrouped data, and (2) a frequency
distribution based on grouped data. Both distributions have three major
characteristics, as shown in Figure 5.32: central value characteristics,
shape, and spread.
Page 172

Figure 5.32 Characteristics of a frequency distribution.

Frequency Notations and Formulas

X all possible data values within a class interval (grouped data) or within an
= absolute number (ungrouped data)
M
mean of data in a frequency distribution
=
f = frequency of data occurrence within the specified range
Rf
relative frequencies based on the total number of values in the collection
=
N
total number of values in the collection
=
Pr
percentile rank of any value in a frequency distribution with unit interval
=
Cf cumulative frequency of a given interval (frequency of the interval plus the
= total of the frequencies of all intervals below the given interval)
Rcf
relative cumulative frequency
=

Page 173

Figure 5.33 Histogram (frequencies represented in the form of vertical

bars).
Page 174

Figure 5.34 Frequency polygon (frequencies represented in straight lines

connecting points).

Graphs Representing Frequency Distributions

A graphic technique is useful in showing the spread of frequency
distributions. The technique enables a pictorial look that aids in the
analysis of data collected. The various types of graphic techniques are
shown schematically in Figures 5.33 through 5.38.

5.8.2 Arithmetic Mean

The mean, often referred to as the average, is the most commonly used
measure of central tendency.
Let

Xi = value of any interval (i = 1, 2, 3, . . ., N)

N = total number of values in the collection
= mean or average of the population
Page 175

Figure 5.35 OGIVE (vertical scale represented in either relative

frequencies, percentile ranks, or cumulative frequency).

Figure 5.36 Normal curve (frequencies represented as continuous,

symmetrical, bell-shaped curve).
Page 176

Figure 5.37 Skewness (symmetry or a symmetry of a curve).

5.8.3 Median
Once data are ranked, the median is the middle observation. It is most
commonly used for ordinal measures. It lies at the

Figure 5.38 Kurtosis (relative peakedness or flatness of a curve)

Page 177

5.8.4 Midrange
The midrange Mr of data is based on the maximum and minimum value
within the data set.

5.8.5 Mode
The mode Md measures the values that occur most often in a given data
set.

5.8.6 Range
The range R is the difference between the largest and smallest values in
the collection (data set).

5.8.7 Proportion
The proportion P is often expressed as a percentage. It represents the
total percentage of values with the same characteristics, such as defect
levels within a given process.

where X=number of values having the same designated property.

5.8.8 Variance and Standard Deviation

The variance is the mean of the squared deviations from the mean and is
usually abbreviated as mean square. The sample variance is used to
estimate the population variance of a collection (data set). The standard
deviation is simply the square root of the variance. Let S = standard
deviation.

Page 178

The coefficient of variation (standard deviation as a percentage of the

mean V) is expressed as

5.9 BASIC REVIEW OF PROBABILITY

The probability measure is the quantification of the likelihood that a

particular event will occur. The probability rules are derived from set
theory.* Figure 5.39 shows an example of the universal set containing all
objects within which subobjects exist.

5.9.1 The Addition Rule

Let

P(A) = probability that event A will occur

P(B) = probability that event B will occur
P(C) = probability that event C will occur
P(1) = 1 (certainty)

5.9.2 Conditional Probability

If A and B are independent,

where

* Detailed theoretical discussion can be found in Duncan, 1974, Quality

Control and Industrial Statistics, 4th ed. Richard D. Irwin, Homewood,
Illinois.
Page 179

Figure 5.39 Universal set containing two objects.

Suppose A1, A2, . . ., Ay are mutually executive of the one event that
must occur; therefore,

5.9.3 Count Tools

Permutation of Objects
An ordered arrangement of r distinct objects is called permutation. The
number of ways of ordering N distinct objects taken r at a time is
designated by

Expression (5.20) is referred to as the Bayes theorem.

Combination of Objects
The number of combinations of N objects taken r at a time is the number
of subsets, each of size r, that can be formed from N objects and is
designated
Page 180

5.10 CONFIDENCE INTERVAL, LIMITS LEVEL, AND POINT

ESTIMATE

The confidence interval is a range of values that include the true value of
a collection (data set of a population).

Confidence limits are the upper and lower boundaries of the confidence
interval.

The confidence level is the value of the preassigned probability used to

determine the confidence interval. Confidence levels of 90, 95, and 99
are most commonly used.

A point estimate is a single-valued statistic used for the determination of

an unbiased estimate of a given parameter.

A confidence limits computation is primarily based on the population

mean, preassigned probability, sample size, degrees of freedom, and a
distribution. The formulas for computing confidence limits are specified in
Table 5.4.

Degrees of freedom (DF) is considered when a sample standard

deviation is used to estimate the true standard deviation of a universe.
DF can be expressed as follows:

The sampling distribution of the means shown in Figure 5.40 provides a

basis for visualizing the total area under the curve at different standard
deviations. The more commonly used intervals are 90, 95, and 99
percent.
5.11 HYPOTHESIS TESTING

A test of a hypothesis is done by analyzing a sample of data to validate a

certain assertion. Two types of sampling errors can occur in evaluating a
hypothesis. (Text continues on page 182.)
Page 181
Page 182

1. Type I error. This sampling error occurs when a true hypothesis is

rejected. The probability of a type I error is usually denoted by a.
2. Type II error. This sampling error occurs when a false hypothesis
is accepted. The probability of a type II error is usually denoted by
b.

Figure 5.40 Sampling distribution of the means.

Page 183

1. Null and alternative hypotheses. The null hypothesis assumes that

there is no difference between specified population parameters;
the alternative hypothesis assumes that there is a difference
between specified population parameters.
2. Possible results in hypothesis testing. The results in hypothesis
testing can vary depending on the decision after analysis. The
various possible outcomes are shown schematically in Figure
5.41.
3. Procedure for testing hypothesis. The procedure specified in
Figure 5.42 is applicable to the testing of most statistical
hypotheses.
4. Hypothesis testing formulas. The most commonly used statistical
formulas for hypothesis testing are specified in Table 5.5

Figure 5.41 Possible results in hypothesis testing.

Page 184

Figure 5.42 Steps in hypothesis testing.

Page 185
Page 186

5.12 BASIC ANALYSIS OF VARIANCE TECHNIQUE

The basic analysis of variance technique (ANOVA) can be used to test

the hypothesis that two or more independent samples drawn from the
same population have the same mean. The procedure for performing the
basic ANOVA is specified in Figure 5.43. Table 5.6 also shows a typical
ANOVA matrix.

5.12.1 Formulas and Computational Procedure for Basic ANOVA

Symbols and Notations

Let

i = subscript for different level of factor A

j = subscript for different level of factor B
k = subscript for different cell values
a = number of levels for factor A
b = number of levels for factor B
n = number of observations per cell
Xijk = cell values for each combination
T = correction term
SSa = sum of squares for factor A
SSb = sum of squares for factor B
SSab = sum of squares for interaction between A and B
SStr = sum of squares for between treatments
SSe = sum of squares for error
MSa = mean squares for factor A
MSb = mean squares for factor B
MSab = mean squares for the interaction
MSe = mean squares for error
HO1 = first null hypothesis
H02 = second null hypothesis
HO3 = third null hypothesis
Page 187

Figure 5.43 Steps in performing ANOVA.

Page 188

Table 5.6 Basic ANOVA Matrix

Source of Degrees of Sum of F-value F-

Mean squares
variation freedom squares data value

Factor A a-1 SSa MSa= SSa/(a-1) MSa/MSe

MSb/
Factor B b-1 SSb MSb= SSb/(b-1)
MSe
AB MSab = SSab/(a-1) MSab /
(a-1)(b-1) SSab
interaction (b-1) MSe
Error ab(n-1) SSe MSe = SSe/ab(n-1) —
(abn)-1 SSt
HO3: All ABij
HO1: All Ai = 0 HO2: All Bj = 0
= 0
Page 189

REFERENCES

American Society for Testing and Materials, 1976. Presentation of Data

and Control Chart Analysis (STP-ISD). Philadelphia, Pennsylvania.

Box, G. E. P., W. G. Hunter, and S. J. Hunter, 1978. Statistics for

Experimenters, John Wiley and Sons, New York.

Deming, W. E., 1982. Quality, Productivity, and Competitive Position, MIT

Press, Cambridge Massachusetts.

Edosomwan, J. A., 1986. Statistical process control in group technology

production environment. Proceedings of SYNERGY ’86, Conference on
Functional Interfacing of Computer-Aided Manufacturing.

Grant, E. L., and R. S. Leavenworth, 1980. Statistical Quality Control, 5th

ed. McGraw-Hill, New York.

Ham, 1.,1976. Introduction to Group Technology. Technical Report

MMR7603. Society of Manufacturing Engineers. Dearborn, Michigan.

The IBM Quality Institute, 1985. Process Control, Capability and

Improvement. The Quality Institute, Southbury. Connecticut, May.

Ishikawa, K, 1976. Guide to Quality Control, revised edition. Asian

Productivity Organization, Tokyo.

Juran, J. M., F. M. Gryna, Jr., 1980. Quality Planning and Analysis,

McGraw-Hill, New York.

Montgomery, D. C., 1976. Design and Analysis of Experiments, 2nd ed.

John Wiley and Sons, New York.

Ott, E. R., 1975. Process Quality Control. McGraw-Hill, New York.

Rodriquez, R., and 0. Adaniya, 1985. Group technology cell allocation.

1985 Annual International Industrial Engineering Conference
Proceedings.

Roscoe, J. T., 1969. Fundamental Research Statistics for Behavioral

Sciences, Holt, Rinehart and Winston, New York.
Page 190
Page 191
Chapter 6
Productivity and Quality Planning

This chapter is concerned with the presentation of a conceptual

framework and methodology for comprehensive productivity and quality
planning in organizations. Basic forecasting techniques that will assist in
productivity and quality planning are discussed. Technological forecasting
is presented as a tool in the overall planning process.

6.1 COMPREHENSIVE PRODUCTIVITY PLANNING

Planning efforts exist in most organizations in a global sense. However,

most of the plans are partial and based on extrapolation techniques. Most
firms extend the annual operating plan into a 2-year, 5-year, or 10-year
horizon. The most common source of projection is based on financial
forecasts and business volume demand. In some situations, a linear
extrapolation is made to project future spending and other resources that
will be needed. The available productivity planning tools and
methodology suffer from the following shortcomings.

1. They offer no logical framework for consistent planning within the

organization.
2. They assume no significant changes in the regulatory
environment. The risks associated with ventures are not
completely monitored.
Page 192

1. They assume no significant changes in economic factors, such as

the inflation rate, resources, competition, and operating policies.
2. They offer no methodology for assessing the organization’s
strengths and weaknesses. There are few or no tools for a
detailed overview of the firm or its industry and economic climate.
3. They offer no methodology for ongoing assessment of the threats
and opportunities in the operating environment.
4. They offer no framework in which problems are easily identified
and pinpointed to a base planning process. In some situations
objectives and goals arise by default, and firms have to deal with
inadequate planning programs through crisis management. This
has a negative impact on total productivity and quality and the
overall effectiveness of the organization.

According to Cotton (1976), ‘‘In productivity, planning is everything.”

Cotton recommends a three-step procedure for productivity planning:

1. Develop an effective planning process and structure in the

organization.

Figure 6.1 Productivity development curve. (Source: Cotton, 1976.)

Page 193

Table 6.1 A Practical Eight-step Productivity Management Program Planning

Process

Precondition or step: strategic and tactical planning awareness for the

corporation and affected groups
Internal strategic audit (looking within): What internal factors (strengths,
Stepweaknesses, conditions, trends, persons, programs, assumptions, etc.)
1. should be considered during the decision, development, and potential
implementation of our productivity management program?
External strategic audit (looking around): What external factors
Step(competitors, strengths, weaknesses, trends, conditions, organizations,
2: assumptions, etc.) should be considered during the design, development, and
potential implementation of our productivity management program?
Step
Planning premises, assumptions: importance—certainty grid.
3:
StepStrategic planning–2–5 year goals and objectives (desired outcomes) for the
4: productivity program.
StepPrioritization and consensus of performance objectives in key results areas
5: relative to the productivity program.
Identification, prioritization, and consensus for / of strategic, tactical and
operational action programs: What programs, plans, resources, etc., will
have to be budgeted for in both the short run (1 year) and longer run (2–5
Stepyears) in order for this program to succeed? Simultaneous operational focus
6: (1 year) with a strategic (innovation, growth, continued development and
support) focus (2–5 years). Note: Some programs will double in 1 year;
others will take 2–5 years or more. Therefore, some subprograms are to be
budgeted for in year 1 but are the basis for longer term payoff programs.
Step
Program planning and resource allocation.
7:
Step
Program evaluation, review, maintenance.
8:

Source: Sink, S. 1985. Strategic planning: A crucial step toward a successful

productivity management program. Industrial Engineering, January, pp. 52–60.
Reprinted with permission.
Page 194

1. Prepare productivity goals and permeate the planning process

with specific objectives based on these goals.
2. Establish productivity surveillance, assistance, and coordination in
a manner tailored to the organization’s need.

As shown in Figure 6.1, Cotton identified the various stages of

productivity programs and projects. He pointed out that initiation, growth,
saturation, and decay are common patterns that are typical of all
productivity programs and projects. Sink (1985) presented an eight-step
productivity management program planning process, shown in Table 6.1 .
He also presented six stages through which many productivity programs
have evolved or will evolve.

Stage 0 The basics—refocus on fundamental management and

engineering principles and practices

Stage I Organizational systems performance measurement—focus on

performance measurement and evaluation systems at individual, group
and organization levels Stage 2 Integration of productivity planning with
business planning—expand the scope and improve the effectiveness of
strategic and operational planning systems Stage 3 Participants in
planning, problem-solving, design, and decision-making—design,
develop, and experiment with participative management processes Stage
4 Productivity measurement systems refinement—enhance the
sophistication of performance and productivity measurement systems
Stage 5 Maintaining excellence—continued and ongoing maintenance
and development, sponsor and promote appropriate levels of change and
innovation

6.2 DEFINITION AND BENEFITS OF COMPREHENSIVE

PRODUCTIVITY PLANNING

Edosomwan (1986) defined comprehensive productivity planning as a

process by which all factors affecting an organization are considered in
formulating its goals and objectives, assessing its capabilities and
capacities, designing alternative courses of action for the purpose of
achieving these goals and objectives, initiating necessary actions for their
imple-
Page 195

mentation, and evaluating the effectiveness of the plan. Comprehensive

productivity planning provides the following benefits.

1. It minimizes resistance to change, reduces fear of the future, and

stimulates creative thinking.
2. It permits the use of objectives to analyze and prepare realistic
actions.
3. It serves as a formal means of coordination and integration in
establishing a productivity program.
4. It sets the framework for identifying future productivity
improvement possibilities and prepares for their possible adoption.
5. It creates a basis for effective supervision of necessary actions
and improves decision-making by providing a better understanding
of the future so that future decisions can be made more rapidly
and more economically.
6. It provides a reference framework for measuring actions and
initiating corrective measures.
7. It provides a basis for evaluating the operational feasibility of
projects, new ventures, and policy changes.
8. It provides a basis for identifying the threats to and the strengths,
weaknesses, and opportunities of the organization.
9. It provides a data base for auditing the effectiveness of staff
programs and the restructuring of the organization to meet plan
objectives.
10. Policies are refined and objectives set based on the diagnosis of
actual events in the organization.

6.3 FEATURES OF COMPREHENSIVE PRODUCTIVITY

PLANNING

The seven major features of comprehensive productivity planning are as

follows:


1. Comprehensive productivity planning must be based on viable

assumptions.
2. Comprehensive productivity planning must have stated achievable
goals and objectives.
3. Creating awareness is an important factor in comprehensive
productivity planning, especially for cooperation within an
organization. This
Page 196

1. Comprehensive productivity planning can have such dimensions

as time (short range, medium range, and long range);
organizational identification (such as certain parts of the
organization—production planning, personal planning, and others);
orientation (internal and external); and scope of the plan (all
factors considered—comprehensive plan; few factors considered
—partial plan).
2. Comprehensive productivity planning requires elements of
flexibility to be built into the design, and it implies standards that
become the basis for controlling the program.
3. Comprehensive productivity planning requires the input of
forecasted variables since it deals with the future to make complex
and interdependent decisions.
4. Comprehensive productivity planning requires suggestions from
management, employees, and unions in designing alternative
courses of action.

6.4 COMPREHENSIVE PRODUCTIVITY PLANNING AS A

COMPONENT IN THE PRODUCTIVITY MANAGEMENT
TRIANGLE

Comprehensive productivity planning is one of the components of the

productivity management triangle (PMT) shown in Figure 6.2. The
productivity management triangle encompasses an information system
that provides input of information relevant to the planning and analysis
process, performance and measurement evaluation and control process,
and improvement monitoring process for the implementation of corrective
actions and techniques that improve productivity. The productivity values
and indices derived in the measurement phase are used for both short-
term and long-term productivity planning. Forecasting techniques are
used to determine productivity values and indices for future time periods.
Page 197

Figure 6.2 Components of the productivity management triangle.

(Source: Edosomwan, 1986, p. 68. Reprinted with permission.)

6.5 COMPREHENSIVE PRODUCTIVITY PLANNING STAGES

Comprehensive productivity planning is not a one-time action but a

continuous process consisting of four interrelated stages: productivity
planning appraisal, strategic productivity planning, tactical productivity
planning, and operational productivity planning. These four stages are
the components of the comprehensive productivity planning cycle
(CPPC) shown schematically in Figure 6.3.

For an organization starting a comprehensive productivity planning

program for the first time, a productivity planning appraisal is the first
stage in the comprehensive productivity planning cycle. Once the factors
affecting the organization internally and externally have been assessed, a
set of strategies is formulated. Based on these strategies, short-range
objectives are formulated. Operational techniques are then used to imple-
Page 198

Figure 6.3 Comprehensive productivity planning cycle. (Source:

Edosomwan, 1986, p. 68. Reprinted with permission.)

ment both short-and long-range objectives. In order to assess the extent

to which the objectives were successfully implemented, an organizational
analysis is performed again. The cycle thus continues as long as the
comprehensive productivity planning program exists in the organization.

6.6 IMPLEMENTATION METHODOLOGY

In order to implement a comprehensive productivity planning program,

major factors affecting the organization in each stage of the
comprehensive productivity planning cycle must be understood.
Following this, the economic impact of the plan is assessed. In Figure
6.4, the implementation steps for CPPC are presented. Each step will
now be described.

6.6.1 Establishment of a Comprehensive Productivity Program

In order to get started with a formal comprehensive productivity planning
program, a planning council should be established. The council will
develop basic implementation strategy, including training requirements,
and focus on key areas of priority and structure that accommodate the
four
Page 199

Figure 6.4 Implementation steps for a comprehensive productivity

planning program.

components of CPPC. The role of the council will also include providing
technical leadership to the planning teams, facilitating total involvement
of all persons concerned (management and employees), reviewing plan
assumptions, goals, objectives, and accomplishments, and facilitating
clear communication upward and downward within the organization. The
planning council acts as the focal point for the organization on all
planning issues. It is recommended that the council be comprised of
members from all key functional areas of the business.
Page 200

6.6.2 Productivity Planning Appraisal Process

The purpose of the productivity planning appraisal process is to
understand threats and opportunities in the environment in which the
organization operates and the strengths and weaknesses of the
organization’s internal operating characteristics. A productivity plan is
then developed to address both the threats and the weaknesses. Action
plans that will continue to maximize the opportunities and strengths of the
organization are enforced.

Environmental Factors
In order to understand the threats and opportunities in the environment in
which a company operates, the following environmental factors must be
considered.

Economic trends: this includes the stage of the business cycle,

inflationary or deflationary trends of prices, monetary policies, interest
rates, tax rates, balance of payments, and surpluses or deficits relative to
foreign trade

Government influence: including legislation on business operations by

the federal, state, and local governments

Legal system: laws and regulations affecting business operations

Market conditions: changes in population, age distribution of the

population, income distribution of the population, and product life cycles

Technological conditions: improved technology affecting raw materials,

production method, production processes, and products or services

Social conditions: focuses on values and attitudes of customers and

employees

Geographic conditions: includes site location, population, transportation,

and availability of labor and resources

Organizational Factors
In order to identify the strengths and weaknesses of the company’s
internal operating characteristics, the following organizational factors
must be considered: Management structures and philosophy, financial
strength, communication flow pattern, production processes, technology
utilized, research and development, resource requirements (human,
materials, energy, and capital), organizational policies, leadership styles,
Page 201

Figure 6.5 Factors and elements in the productivity planning appraisal

process.

management goals, and marketing and distribution channels. Based on

the outcome of the environmental and organizational factor analysis, a
productivity plan that addresses both the threats and the weaknesses is
then put in place. Action plans that will continue to maximize the
opportunities and strengths of the organization are enforced.

The factors involved in the productivity planning appraisal process are

shown schematically in Figure 6.5.

6.6.3 Strategic Productivity Planning Process

Strategic productivity planning is concerned with long-range goals and
objectives, and it is broad. It refers to the process of setting the basic
purpose and direction needed by an organization. Based on the appraisal
performed in stage 1, the strategies and goals of the organization are
formulated over the long run. To formulate goals and objectives,
understanding corporate philosophy and operating strategies is
necessary. This is useful for the evaluation of productivity improvement
ideas. The corporate philosophy usually consists of the objectives,
operating procedure, and environmental constraints. Objectives are
interacting rather than independent; hence this is a complex and dynamic
process.
Page 202

Guidelines for Formulating Objectives

1. Productivity planning objectives must be based on viable

assumptions. The knowledge obtained from the environmental and
organizational analysis becomes crucial in formulating
assumptions about such items as product demand, plant capacity,
and resource requirements for production, sales, and services.
2. Productivity planning objectives must have achievable end results
that are measurable. A single source of direction of the objectives
reduces confusion within the organization. The partial, total-factor
and total productivity indices are good measures of an
organization’s performance and are recommended by Edosomwan
(1985). Such measures have already been presented in Chapter
4.
3. Productivity planning objectives must be realistic, attainable, and
based on identified known opportunity. The focus should be on
setting objectives that are obtainable within the range of
performance capability and resource availability.
4. Productivity planning objectives must be controllable through
assigned accountability. The objectives must be reducible into
various tasks that are assignable to work groups, departments,
and individuals. Check points must be put in place to measure
performance.
5. Productivity planning objectives must constitute three elements.
Attribute, which specifies the dimensions along which the
achievement of the objectives are to be measured; scale, which
provides a yardstick for measurement at all levels; and goals,
which specify value on the scale to be obtained within a specific
time frame.

The elements involved in the strategic productivity planning process are

shown schematically in Figure 6.6.

6.6.4 Tactical Productivity Planning Process

This stage of productivity planning is short range and concerns itself with
the means of implementation. Tactical productivity plans support strategic
plans and are relatively flexible. It is used to make decisions on such
areas as production control, inventory control, resource requirement
planning, labor planning, information planning, and purchasing. Tactical
productivity planning uses models in its planning process. The models
are used in this stage to describe, explain, and predict the behavior of the
system they represent. Based on specific organizational need, analytic
models (linear programming, nonlinear
Page 203

Figure 6.6 Elements in the strategic productivity planning process.

programming, quadratic programming, dynamic programming, integer

programming, inventory models, queuing models, Pert/CPM models,
reliability models, and Markovian decision models) or simulation models
(Monte Carlo technique, heuristic technique, and operational gaming
technique) may be used as an aid in the planning process. In this step
the productivity plans are carefully evaluated and redistributed by
business sector. The assumptions and resources supporting the plans
are streamlined to suit short-range business demand. The key elements
involved in this process are shown in Figure 6.7.

Figure 6.7 Elements in the tactical productivity planning process.

Page 204

6.6.5 Operational Productivity Planning Process

Operational productivity planning is the last phase of the cycle. It is an
operational, as opposed to a preparational phase. The other phases have
all contributed toward specifying the design and laying the foundation for
the development of the operating plan.

The purpose of operational productivity planning is to assign specific

actions to specific groups with complete instructions. In order to generate
reliable plans, the ability of each group must be recognized. The
assignment process must take into account a group’s access to needed
information, needed data, qualification, and experience. The delegated
actions require appropriate tracking means. The data and information
processing must specify means for collecting data, processing, storing,
and transmission. Provisions also have to be made for reporting
unplanned events. However, it should be determined the event to be
reported and the format in which to report it. Since operational
productivity planning concerns itself with determining and delegating
implementation actions and controlling them, the following functions are
performed in this stage.

Programming
This is the function of determining the specific action steps necessary to
attain the formulated goals and objectives. Designing alternative courses
of action and choosing the best or optimum from among the alternatives
is an effective programming method. One way of doing this is to test each
action based on its feasibility and potential impact.

Scheduling
The scheduling function is to fit a timetable to the action steps selected.
Scheduling assigns various action steps to the facilities required in such
a way that all costs associated with the productivity program are
minimized. Scheduling enables actions to be completed on time, action
steps to be performed accurately, and resources to be utilized effectively.

Budgeting
The budgeting process provides a comprehensive financial plan based
upon predetermined goals and objectives. The budgeting process also
provides a means for assuring financial coordination by providing a
mechanism for
Page 205

comparing revenues and expenses. The accuracy of the budget depends

on a comprehensive management information system, an accurate
accounting structure, and a clear understanding of the interdependencies
among functions.

Controlling
Controlling the course of actions should be made an integral part of
operational productivity planning. No plans will have a substantial impact
on the program if they are not kept under proper surveillance. The
controlling function uses a control system to achieve its objectives. This
control system can be defined as a set of activities that maintains, in
terms of predetermined goals, ongoing surveillance of the results of a
process and attempts to correct the process when actual results are
different from planned results. It can be viewed, mechanically, as
consisting of three basic parts. A control sensor is used in reporting after
identifying the actual state of the process under control. A control monitor
is used for comparing the report (actual result) against the expected
result. The output of this process should also show a variance between
actual and expected results. The effective monitoring process must have
a stated target in the dimension of the goal and a comparison framework.
Finally, there must be a control analyzer that provides a means for
analyzing deviations and taking corrective action aimed at the reduction
in the magnitude of the variance. The elements involved in the
operational productivity planning process are shown in Figure 6.8.
Figure 6.8 Elements in the operational productivity planning process.
Page 206

6.6.6 Measurement Technique Implementation

In order to assess how well the plans were implemented, measurement
techniques, such as total, total-factor, and partial productivities, should be
implemented. Edosomwan (1985) developed and tested a productivity
measurement model that is unique in this type of situation. The model is
presented in Chapter 4. These measures should be used in conjunction
with other types of financial measures, such as the balance sheet rate of
return on investment and risk assessment based on cash flow. Record
and take action on all potential problem areas.

6.6.7 Improvement Action Implementation

In this step, improvement actions that address all potential problems
identified in Section 6.6.6 are implemented. Improvement action can vary
from technical actions to people-oriented or customer-oriented actions. It
may be task based or technology based. The key is to track the impact of
all actions implemented and make modifications as necessary.

6.6.8 Project Maintenance

Comprehensive productivity planning is not a one-time action. It involves
an ongoing assessment of the organization requirements associated with
the components of the CPPC. Periodic review, training, competitive
analysis, economic monitoring, and other tasks must be done
continuously. Data collection and information systems should be
implemented to ease the burden of tracking historical issues.

6.6.9 Setting Comprehensive Productivity Implementation Priorities

Since comprehensive productivity planning for the entire organization is
time consuming, it may be necessary to direct efforts to areas in which
benefits will be most apparent. Cost consideration is usually the basis for
this priority. Problem areas and business demands are other factors to be
considered. The productivity planning activities must be understood and
supported by those charged with their implementation. Table 6.2
suggests how the comprehensive productivity planning stages could be
assigned in a large organization.
Page 207

Table 6.2 Allocation of Comprehensive Productivity Planning Tasks

Dynamic time
Component of
Responsibility duration for ongoing
CPPC
assessment

productivity Usually achieved through task force;

Stage
planning could be directed by site or by 0–2 years, periodic
1:
appraisal corporate headquarters
strategic
Stage 5–10 years, long
productivity Corporate headquarters
2: range
planning
tactical
Stage 2–5 years, medium
productivity Division headquarters
3: range
planning
operational
Stage 0–2 years, short
productivity Plants, departments, groups
4: range
planning

Source: Adapted from Edosomwan, 1986. Reprinted with permission.

6.7 COMMON PROBLEMS ENCOUNTERED DURING

IMPLEMENTATION AND WAYS TO COUNTER THEM

Envisioning the future based on today’s operating condition is often not

an easy task. As a result, various forecasting techniques are used as the
basis for predicting the future. Forecasted values for business volume
demand and resources are likely to cause errors in any of the stages of
the comprehensive productivity planning cycle. To overcome this
problem, forecasted values should be supplemented by managerial
judgment and experience with issues that require planning. Forecasting
should be performed with diligence and with the best available skills and
judgment. The best forecast is normally obtained through teamwork and
good sources of data collection. Also, the method of forecasting has to be
Page 208

Figure 6.9 Problems and solution strategies in comprehensive

productivity planning implementation carefully selected. Erratic changes
in corporate policies and objectives can have a negative impact on the
productivity planning process. This problem can easily be corrected by
top management. Changes in policy and objectives must be
accomplished with an analysis of how they will affect the organization,
the plan assumptions, and activities. Resistance to change is another
common problem when trying to establish a comprehensive productivity
planning program. A teamwork approach that involves all levels of
management and employees should be adopted. This
Page 209

will eliminate the problem of the ‘‘It is not my plan” syndrome. Specific
planning tasks should be assigned to specific people, and meetings
should be held regularly to discuss and resolve problems of potential
deviations from the plan. Productivity planning is not a one-time action. It
is a continuous process that requires total organizational involvement in
constantly analyzing business trend patterns and formulating and
implementing new objectives that provide competitive operating
advantages for the organization. The common problems usually
encountered and solution strategies for handling them are presented in
Figure 6.9.

6.8 RELATIONSHIP BETWEEN PRODUCTIVITY PLANNING

AND MEASUREMENT

As presented in Chapter 1, comprehensive productivity planning is one of

the components of the productivity and quality management triangle. The
productivity values and indices derived in the measurement are used for
both short-term and long-term productivity planning. Forecasting
techniques are used to project productivity values and indices for future
time periods. Regardless of the forecasting technique used, managerial
judgment still plays a major role in the overall planning process.

6.9 BASIC FORECASTING TECHNIQUES FOR

PRODUCTIVITY AND QUALITY PLANNING

The ongoing assessment of the productivity and quality planning program

involves a dynamic time duration. Productivity and quality measures of
current time periods should be projected for future time periods for
continuous short-and long-range planning and detailed assessment of
such projection on the overall business. Forecasting as a tool in the
planning process provides the basis for accomplishing such objectives.
Some of the forecasting techniques will now be described.

6.9.1 Last Value Forecasting Technique (LVFT)

This technique projects the productivity value or indices and the yields of
a particular process or task based on the last value of previous time
periods. Let
Page 210

Pt = productivity value or indices forecast for a given task or process in period t

quality yield or characteristics forecast for a given task or process in
Qt =
period t
Pt-1 actual productivity value or indices for a given task or process in the last
= period
Qt-1 actual quality yield or characteristics for a given task or process for last
= period
The LVFT proposes that

The LVFT has the disadvantage of being based upon a sample size of 1 .
The estimate often has wide variance and can be imprecise. The LVFT is
useful only in situations in which the process is changing very rapidly so
that any value before time t is almost irrelevant. The technique is also
useful if the conditional distribution of the process concerned has a small
variance.

6.9.2 Arithmetic-Average Forecasting Technique (AAFT)

This technique uses historical data to project the productivity values or
indices and quality yields for a future time period.

where:

productivity values or indices forecast for a given task or process for period
t
Pt = historical data on productivity values and indices for given task or process
quality yields for a given task or process for period t
N = number of study period
t = 1,2,3, . . .,K
Qt
historical data on quality yields for a given task or process
=

Page 211

The AAFT relies on large masses of data. The technique is useful in

situations in which the data are stationary and randomly distributed. One
major disadvantage of this technique is that the computations and
tracking required for the data can be cumbersome. Also, when large data
included in the forecast involve process occasional shifts periods, the
forecast values may be misleading.

6.9.3 Moving-Average Forecasting Technique (MAFT)

MAFT generates the next period productivity values or indices and quality
yields for a given task or process by averaging the actual values for the
last n periods.

where:

Pt-1 = last period productivity value or indices for a given task or process
Qt-1 = last period quality yields for a given task or process
N = specified moving average period, for example, 2 months, 3 months
The moving-average forecasting technique uses relevant historical data.
The estimator has one major advantage. It uses recent history and
represents multiple observations. Although the technique is good for
point analysis and long-range analysis, it responds to trends with delay
and does not compensate for seasonal changes.

6.9.4 Exponential Smoothing Forecasting Technique (ESFT)

ESFT places more emphasis or recent data. The weight given to past
data decreases geometrically with the increasing age of the data. This
technique estimates the average productivity and quality values by
adding to the last average forecast a fraction of the difference between
actual values

Page 212

and average forecast. The ESFT is good for treating autocorrelated data.
Let

average new forecasted productivity value or indices for a given task or

Pt =
process
N = number of periods
Pt-1
actual productivity value indices for a given task or process
=
Pt-1
average productivity forecast values and indices
=
= exponential smoothing constant O > a > 1
Et-1
error in previous forecast
=
New productivity values and indices = old forecast + actual forecast—old
forecast:

Choosing the right a may pose a problem. If a is too small, it responds to

change slowly. The most commonly used values of a are 0.2 and 0.3.
When past history is available, a simulation technique may be used to
select the appropriate a.

6.9.5 Choosing the Best Forecasting Technique

The mean absolute deviation (MAD) is one method of selecting the best
forecasting technique. The mean absolute deviation is determined by
dividing the sum of absolute deviations by the number of observations:

where:

Pi = actual productivity values or indices

P = forecasted productivity values or indices
N = number of observations
Each forecasting technique is applied to the historical data, and the
technique with the smallest MAD is selected. The forecast error Fe can
also be used to choose the technique:

Page 213

6.9.6 Factors Affecting the Choice of Forecasting Technique

The following factors can determine the applicability of forecasting
techniques to a given data set:

1. Forecasting accuracy based on minimum data requirements

2. Length of time for which projections are made: short, medium, and
long range
3. Patterns of variation present in the historical data

6.9.7 Steps in the Forecasting Process

A six-step approach that can be used in the forecasting process is shown
schematically in Figure 6.10.

Figure 6.10 Steps in the forecasting process.

Page 214

6.10 QUALITY PLANNING

Comprehensive quality planning involves a process of assessing all

factors that could affect product or service quality throughout the
specified life cycle. The four components of the productivity planning
discussed in Section 4.5 also apply to quality characteristics. The only
major difference is that several additional aspects must be managed.

1. A program for product and service reliability planning must be

instituted. Such a program provides appropriate planning for reliability
prediction, design review, reliability testing, failure analysis, defect
isolation, stress analysis, identification of critical parts as part of the
methodology for reporting failure, and overall reliability goals for long-,
medium-, and short-range planning.

2. A program for quality in planning the business process. Current

problems of quality will change over time. There must be strategies for
reducing process defect levels in the future, projections of process yields,
and management tools to plan for their re-evaluation. Quality must be
obtained at the source of production or service at a cheaper cost through
appropriate sets of goals or objectives implementable over time.

3. Vendor management planning. The last two decades have seen

emphasis on using vendors as a focal point for product suppliers and
manufacturing and service operational units. The planning aspects in
vendor quality management must encompass methodology, processes,
and procedures to improve vendor-related defects, with the ultimate goal
of zero defects in all products delivered on time to the required source.
When strong reliance on vendors calls for specifications, there must be a
strategy for future product quality based on how the specification might
change over time. Vendor selection strategy most also encompass a list
of defects and the quality expected from various vendors.

4. Planning for customer quality requirements. The goal should be a

defect-free product to the customer at all times. A planning approach to
ensure this must involve product serviceability, maintainability patterns, a
built-in trigger backup for products, and ongoing assessment of the
customer environment. The key is to understand how the customer’s
requirements will change over time. A strategy for quality that enables
design, processes, production, and services to meet such a demand is
then planned for the future. All new products or services must be better
than those they are replacing. Customer quality requirements can be
assessed through interviews of the sales force or by questionnaires
specifically
Page 215

designed for product and quality characteristics. The results of such

questionnaires should be referred to a common period to enable realistic
planning for quality variables.

5. Planning based on technical vitality and skills. This may be one of the
most important aspects that determine the quality of the product or
service at any given point in time. As a product or service changes over
time, the appropriate skills required to produce or offer a good product or
service must be assessed and planned for. The most reliable information
needed for skills planning is the processes and phases of the product or
services. The key planning question that must be answered is: What
skills are required for each phase, each process, and each operational
unit of the future product or service?

6. Quality policies and objectives. At all levels of management and

function, there should be policies that provide guidelines for planning the
overall quality program and for specifying key quality attributes and
characteristics that may change over time. At the organizational level, a
policy statement must be made and goals for the future must be clearly
stated and defined with task responsibility as it relates to the planning
aspect assigned to a specific group with complete instructions. Quality
objectives must encompass strategies that provide a basis for leadership
through product performance, eliminate a poor image with customers and
vendors, reduce reliance on inspection and rework reduction, require less
field and service support, lessen complaints from customers, and reduce
the cost of the product warranty. At the operational level, it is
recommended that each department or operational unit formulate its
quality goals and objectives that compliment the overall organizational
goals and objectives.

7. Quality information system. In order to plan and make realistic

projections on quality issues, a quality planning information system must
be instituted. Such a system will track and provide the basis for the
analysis of audit results, design evaluations for quality, process data,
inspection data, market research information on quality, purchase parts
and materials characteristics, specifications for processes, and tools, field
performance data, and product design test data. Computer-based quality
information is recommended. Manual tracking has a major disadvantage
of excessive manual computations, tracking, and control. However, the
computer-based systems, if implemented, must also be able to provide
information on real time with minimum system downtime. The quality of
the computer software can have significant impact on the overall quality
of the data base management. Examples of some types of reports on
quality are shown in Table 6.3.
Page 216

Table 6.3 Allocation of Comprehensive Productivity Planning Tasks a

Usual
departmental Typical Typical Typical
Control Typical unit of
source of standard format frequency
subject measure
data

Negative
customer
reactions
Number of
complaints per 1000
• Complaints Field service Historical Narrative M
units; per $1000 of
sales
Value of returns per Historical,
• Returns Accounting Narrative M
$1000 of sales market
Number of service
calls per 1000 units
• Service under warranty; cost Historical,
Field service TabulationQ
calls of service calls per market
1000 units under
warranty
• Guarantee Dollars per 1000 Historical,
Accounting TabulationQ
charges units under warranty market
Field

performance
Failure rate; mean Engineering,
• Product
time between Field service historical, Charts M
reliability
failures market
• Spare-part
Dollars of sales Accounting Historical TabulationA
sales
Product
conformanceDefects per unit;
on process average for Inspection, Historical, Charts M
inspection, specific qualities test engineering
test
Outgoing
quality
Quality Historical,
based on Demerits per unit Charts M
assurance market
product
audit
Page 217

Accounting,
Vendor quality Dollars of cost per dollars of
quality Historical Tabulation Q
performance purchases
control
Dollars per hour of direct
Quality costs:
labor; per dollar of direct Accounting,
appraisal, Historical,Tabulation,
labor, shop cost, processing quality Q
failure, budget charts
costs, sales; per unit of control
prevention
product, equivalent product
Surveys; audits
Quality
other than Various Plan Narrative S
assurance
product audit
Narrative,
Quality
Opportunities Return on investment, other - tabulation, Q
control
charts
Customer Marketing,
relations on field
quality (other Various service, - Narrative Q
than alarm quality
signals) control
Results of
Tabulation,
quality Quality
Dollars, return on investment Plan narrative, Q
improvement control
charts
programs

aFrequency code: M = monthly; Q = quarterly; S = special.

Source: Adapted from Juran, J.M., and Gryna, F.M., Jr., Quality Planning and
Analysis, 2nd ed. McGraw-Hill, New York, pp. 520–521. Reprinted with
permission.
Page 218

6.11 TECHNOLOGICAL FORECASTING: A KEY

INGREDIENT IN THE OVERALL PLANNING PROCESS

In the era of technological explosion, productivity and quality within a

given time period in any organization will be driven largely by the types of
technology involved. It is important for the organization to have a
formalized program for technological forecasting. Such a program can
provide the following benefits:

1. Help to establish the timing of new technology and maximize gain

from events that are the result of action taken by the corporation.
2. Set quantitative performance standards for new products,
processes, and materials.
3. Assist in the planning of research programs: the amount and
direction, the scientific skills needed, and resource utilization.
4. Guide engineering programs toward the use of new technology
and the adjustment of new technical demand.
5. Help in new product development and current product
improvement.
6. Help to identify major opportunities and threats in the technological
environment and their social impact on employment skills, and
educational needs, for example.
7. Help to identify the economic potential and impact of technological
progress and guide technological planning and its contribution to
long-range planning.
8. Help to determine leadership in industry and increase the future
market share and profit of the corporation.

6.11.1 Definition of Technological Forecasting

Technological forecasting is a tool used for the prediction and estimation
of the feasible or desirable parameters in future technologies. In high-
technology industry, technological forecasting is seen as a prediction of
what might happen given certain assumptions and objectives.
Page 219

6.11.2 Operational Definition of Technological Forecasting by

Levels in High-Technology Industry
Technological forecasting can be defined according to the operational
level:

Policy planning. The clarification of scientific technological elements

determining the future boundary conditions for corporate development.

Strategic planning. The recognition and comparative evaluation of

alternative technological options.

Operational or tactical planning. The probabilistic assessment of future

technology.

Marketing and corporate profit planning. The clarification of scientific

technology needed to expand the market share and compete in the world
market.

6.11.3 Technological Forecasting Methodology in High-Technology

Industry
It is important to point out that, owing to the great competition that exists
within high-technology industry, a logical framework is needed to perform
adequate forecasts. Technological forecasting methodology is presented
schematically in Figure 6.11 . Each component of the framework will now
be described.

Where Technological Forecasting Begins

Technological forecasting begins with a strategy meeting of the
management team. The purpose of the strategy meeting is to reach
agreement and understanding of the fundamentals of the development of
the various subforecasts, to assign responsibilities, and to set a
schedule. The fundamentals include

1. A review of total corporate long-term and short-term objectives.

2. An assessment of the present status and a relative forecast of the
future technology needed for the total business environment.
 3. A statement of the objectives and motivation for the technological
forecast period within the constraints and opportunities recognized
in the total business environment.

Technological forecasting may also begin with individuals or group

intuition. This usually occurs after on-the-job training in individuals with
self-initiative and curiosity about what may happen in the future.
Page 220

Figure 6.11 Technological forecasting methodology in high-technology

industry.
Page 221

Technological Forecasting Group (TFG) Activities

Most major corporations in high-technology industry have dedicated
people who have been given the responsibility for technological
forecasting. The technological forecasting group is made up of various
experts with interdisciplinary backgrounds. The TFG ensures that all
technical assumptions and motivations for the technology are clearly
defined; they determine the internal and external facts needed, evaluate
competitor strategy and customer requirements, select approaches and
techniques to perform the forecast, assess the social impact of the
forecast, code variables and parameters, and monitor the technological
forecast and implementation schedule.

Important Aspects of Technological Forecasting

1. Sales history
2. Management strategic plan and policy
3. Marketing structure and strategy
4. Current product classification and diversity
5. Manufacturing capability
6. Financial capacity
7. Critical skills required

Other Factors Influencing Technological Forecasting

1. Total business environment

2. Some environmental influences on business
3. Total industry outlook
4. Appropriate facts about competitors and their products and plans
5. Outside expert recognition

Some of outside influences on business were shown schematically in

Figure 6.11 .


Evaluation of Competitor Strategy, Customer Requirements, and the

State of the Art in Specific Areas of Interest
Some of the specific reasons for evaluating competitor strategy, customer
requirements, and the state of the art in areas of interest are as follows.
Page 222

1. What is available in high-technology industry, and what are the

areas of interest?
2. What are the competitors doing?
3. What products satisfy the customer of today, and what product will
satisfy the customer of tomorrow?
4. Is there consistency in manufacturing capability, market structure,
and labor skills, for example?
5. What are the latest measuring techniques (scientific papers and
research efforts)?

Technological Forecast Timing

In high-technology industry the range of the technological forecast period
is usually dictated by the purpose of the forecast. The technological
forecast horizon is required to cover the cumulative lead time required for
executing the plans. The technological forecast can be classified as
Short-term technological forecast, > 2 years
Intermediate technological forecast, 3–4 years
Long-term technological forecast, 5–20 years The frequency of
technological forecasting and review is usually in intervals that are no
longer than the length of the forecast period; for example, annual
forecasts are updated quarterly, long-term forecast annually.

Means, Approach, and Techniques of Measurement

The two main approaches usually used for technological forecasting are
(1) the exploratory approach (push approach): project the area of
technological forecasting to the future; and (2) normative approach (pull
approach): start with goals and objectives, then identify the end item or
result.

Some Techniques for Technological Forecasting

In high-technology industry, statistical techniques, operation research
techniques, and reliability analysis are heavily used in technological
forecasting.

Single-trend extrapolation: This technique involves extrapolating the

trend of certain technological parameters; for example, the memory
capacity of a personal computer, maximum aircraft speed, and operating
Page 223

energy of particle accelerators are plotted over long periods as a function

of time. It is then assumed that the nature of the progress experienced in
the past will continue to occur in the future following the same trend.

Growth analogy. Growth analogy techniques assume that biologic growth

provides a useful analogy for many technologies. For example, Lenz
(1968) applied the biologic growth analogy to a projection of trends in the
maximum speed of military aircraft.

Regression and correlation. This is a statistical technique used in

technological forecasting to forecast the values of certain unknown
parameters given historical trends. The two most popular regression
methods are simple linear regression and double linear regression.

Substitution. In the substitution forecast, instead of measuring the

increase in performance occurring in technology, the rate at which one
technology is substituted for another in general usage is measured.

Fitted curves. This technique involves the extrapolation of time-series-

related trends. The fitted curves are used as an aid to forecast what
could happen in the future.

Delphi. The Delphi technique is used to obtain a consensus of experts.

This technique is designed to systematically combine individual
judgments and thus obtain a reasoned consensus about the
technological forecasting input needed. Questionnaires are used in most
cases to obtain opinions.

Scenarios. Scenarios can either be a direct extrapolation of the present

conditions or variations formed by adding new conditions to the present
environment. The three methods of scenario are the consensus
techniques, the cross-impact matrix, and the alteration-through synopsis.
The cross-impact matrix, which permits the orderly investigation of the
effects of potential interactions among items in a forecasted set of
occurrences, is the most widely used.
Expert Evaluation of Technological Forecasts
Expert evaluation is a sanity check on the technological forecast group
output. The procedure ensures

1. Consistency of technological forecasting objectives with corporate

strategic direction: Why is this forecast needed?
2. Appropriate technological forecasting assumptions and intelligently
interpreted facts
3. Appropriate information and data and intelligently interpreted facts
4. Validity of the approach and the techniques used
Page 224

1. Comprehensibility of study
2. Assessment of social impact
3. Realizing the limitations of the technological forecast
4. Monitoring tools and techniques
5. Implementation schedule and recognition of pitfalls
6. Validity of the time horizon forecast

Coding of Technological Forecast Variables, Parameters, and Values

One of the most important tasks of the technological forecast group is the
coding of forecast variables, parameters, and values. This is done to

1. Prevent potential competitors from obtaining the technological

forecast information, avoiding a loss of the market share or
product leadership, for example
2. Prevent unqualified practitioners from misusing the technological
forecast information, especially in such areas as defense systems
and intelligence monitoring
3. Protect the product announcement schedule
4. Minimize the loss from internal and external data sales crime

Monitoring the Technological Forecast

Technological forecast measuring tools and the units of measure should
be selected or designed to fit the subject, the product, the environment,
the objective, and the user. Some examples of practical measuring tools
for monitoring the status of technological forecast errors in high
technology industry are (1) the coefficient of variation = standard
deviation divided by the average projected forecast value (demand) and
the standard error = standard deviation divided by 5N (number of
observations); (2) volume index graph, line-average graph, and moving-
average graph; (3) comparison statements; and (4) the company profit
plan.


Problems and Pitfalls in Technological Forecasting in High

Technology Industry

1. Inappropriate environmental study (gathering data on competitors

and politics)
2. Lack of adequate data on industry averages in many technical
specification areas
Page 225

1. Distortion of the forecast by strong desire over specification or

reliability information, for example
2. Poor technological forecast monitoring tools and techniques
3. Lack of total involvement from the management team and
technological forecasting group members
4. Lack of documentation of the technological forecast

Keys to the Successful Use of the Technological Forecast in High-

Technology Industry

1. Understanding the basic assumptions of technological forecast

and their limitations and preparation to be flexible enough to
manage the forecast successfully within an agreed and
preplanned tolerance range of forecast error
2. Timely measurements of technological forecast errors
3. Good management interpretation and understanding of differences
between the technological forecasts and actual values
4. Management response to the ‘‘vital signs”: timely recognition and
understanding of developing problems and adjusting forecasted
values and parameters to suit prevailing conditions
5. Total involvement of all the “players”

Summary of Key Issues in Technological Forecasting

Technological forecasting is important because it defines our best
estimate of what could happen, the opportunities and restraints of our
future. Usually all the subsequent planning of production, materials, and
capacity will be developed with the scope and parameters of a corporate
technological forecast. We must identify information about the future that
will be essential to technological forecasting: Calculate any essential data
that may be done with precision.
Forecast the balance of essential information that is required but cannot
be calculated.

Technological forecasting requires the involvement and commitment of

every member of the forecasting group and management team.
All assumptions on which technological forecasts are based should. be
defined and stated, understood and, all agreed to, by all members of the
forecasting group and management team.

Page 226

The risk-reward relationships involved in hedging against the margin of

technological forecast error should be discussed openly, to avoid conflicts
and to build credibility.

Good technological forecasting is accomplished by progressively

gathering appropriate essential facts; interpreting the facts intelligently;
modifying statistics with management judgment; monitoring the
technological forecast error; and progressively updating and refining the
forecasts.

Understanding and using the technological forecast is even more

important management work than making the forecast. Decision makers
are concerned with validity, credibility, comprehensibility, and accuracy.

Technological forecast accuracy depends upon many factors, including

the qualitative and quantitative techniques utilized, the source of the data,
forecaster know-how, a clear understanding of the business environment,
and knowledge of the state of the art in the field.

Attention should be paid to significant differences between the

technological forecast and the actual situation. These are usually early
warning signals calling for corrective action.

Technological forecasting is an input to the planning process; it is not a

plan in itself. A technological forecast tries to predict what may occur
technologically.
Page 227

REFERENCES

Abell, D. F., 1980. Defining the Business. Prentice-Hall, Englewood Cliffs,

New Jersey.

Ackoff, R. L., 1981. Creating the Corporate Future. John Wiley and Sons,
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Andrews, K R., 1971. The Concept of Corporate Strategy. Dow

Jones/Irwin, Homewood, Illinois.

Ansoff, H. 1., 1965. Corporate Strategy: An Analytic Approach to

Business Policy for Growth and Expansion. McGraw Hill, New York.

Blanchard, K, and S. Johnson, 1982. The One Minute Manager. William

Morrow, New York.

Bradley, J. W., and D. H. Korn, 1900. Acquisition and Corporate

Development, A Contemporary Perspective for the Manager. Arthur D.
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Bright, J. R.. 1968. Technological Forecasting for Industry and

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Cetron, M. J., 1969. Technological Forecasting, A Practical Approach.

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Cetron, M. J., and A. L. Weiser, 1968. Technological change,

technological forecasting and planning R&D—a view from the R&D
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Cotton, F., 1976. In productivity, planning is everything. Industrial

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Dalkey, N. C., The Delphi method: An experimental study of group

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Edosomwan, J. A., 1985. A task-oriented total productivity measurement

model for electronic printed circuit board assembly. International
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Edosomwan, J. A. 1985. A nine-step approach for long range productivity

planning. Working paper, ASEMM.

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planning. Industrial Engineering, January.

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and Row New York.

Harrigan, K R., 1900. Strategies for Declining Businesses. Lexington

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Helmer, 0.,1969. Analysis of the future: The Delphia method. In

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Henderson, B. D., 1982. Henderson on Corporate Strategy. Mentor

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Lenz, R. C., Jr., 1966. Technological forecasting. Paper presented at the

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Page 229
Chapter 7
Techniques for Resolving Quality Problems

This chapter presents four group or team-based quality problem solving

techniques. These techniques are generally used by quality teams or
work groups to identify problems in both production and science oriented
environments, analyze them, contain them and eliminate or resolve them.
The four techniques are the Problem Resolution Model, first introduced to
corporate environments in 1993, the Nominal Group Technique, the
Quality Error Mapping tool and the Quality Error Removal technique.

7.1 FROM QUALITY CIRCLES TO PROCESS

IMPROVEMENT TEAMS

In the early 1960s, the Japanese started the quality circle (QC) concept,
based on the motivational techniques developed by American
researchers and practitioners. In the late 1970s, the quality circle concept
began to receive unprecendented worldwide attention. This was primarily
due to Japanese success in outputting high-quality products at high
levels of productivity using QC techniques. In the late seventies and early
eighties, many companies and organizations worldwide adopted the QC
technique. There are several publications on the subject of QCs, such as
Dewar (1970), Robinson (1982), Doyle and Straus (1978, IBM (1982),
and Edosomwan (1985 a, b). In addition to allowing workers the freedom
to
Page 230

resolve problems based on their own judgment, the QC concept

facilitated teamwork. More recently the QC concept has migrated to the
concept of Quality Improvement Teams (QlTs) or Process Action Teams
(PATs). Quality Teams or Process Action Teams have been integrated
into the work environments of production, service and government
agencies worldwide. This team based approach to understanding the
work environment, managing the work environment and resolving quality
problems has led to a significant change in the culture of organizations in
the 1990s. The QlTs or PATs are now migrating to self-managed work
teams that are empowered to perform functions and tasks that have been
traditionally assigned to supervisors and managers. Most significantly
these teams are empowered to work on business and market-changing
problems that affect the bottom line of organizational effectiveness and
viability. These teams utilize many tools and techniques to identify and
resolve quality and productivity related problems in their work
environment. Four popular techniques are presented below.

7.2 PROBLEM RESOLUTION MODEL

The Problem Resolution Model, developed by Edosomwan (1993), is

based on three fundamental principles:

1. In today’s fast-paced, customer sensitive environment, problems

need to be contained as a first priority to minimize the potential
negative impact of major problems.
2. Problems need to be thoroughly investigated and resolved in a
timely manner with the customer as the number one priority.
3. Problems need to resolved in a such a way that they do not recur
and that involves proactive preventive actions on the part of all
involved.
4. Permanent solutions should be sought for all problems.

A graphical representation of the Problem Resolution Model is shown in

Figure 7.1. The first action to be taken when confronted with a problem is
to identify the impact of it and put in place actions which will prevent a
chain reaction of events that could escalate the problem. The
containment process usually involves customer contact and immediate
action. Employees should be empowered and trained to contain
problems. Once the problem is contained the focus must be to
investigate the problem, find the root cause and resolve it at its source.
Finally the focus must be on ongoing improvement and prevention
activity to ensure that the problem does not occur again. Once resolved,
data and information on the problem resolved
Page 231

Figure 7.1 Problem resolution model.

should be kept on a data base to be used for feedback. The data base
should contain all the relevant information on the problem resolved.

7.3 QUALITY ERROR MAPPING

Quality Error Mapping (QEM) is a matrix analysis technique developed by

Edosomwan in 1992. QEM is useful in assessing the magnitude of errors
occuring at different source points. QEM is used to analyze process data
to pinpoint the source of errors and defects. QEMs can be developed to
classify errors by process, by task, by employee or other criteria. A
Process Error Map is shown in Figure 7.2. Data must be available or
collected which identifies the number of errors occurring in a system. The
data is then classified by type of error that is occurring. The various types
of error classifications form the matrix rows. The matrix column headings
are dependent on the type of QEM that is being analyzed. In the example
below, a process error map is shown, and the column headings represent
the different process source points. Once the matrix is prepared the
number of errors or defects of each type occurring at each source point is
identified and inserted. The matrix is then analyzed to identify problem
sources and courses of action.
Page 232

Figure 7.2 Process error map for typical electronics manufacturers.

7.4 NOMINAL GROUP TECHNIQUE

The Nominal Group Technique (NGT) is a methodology used by groups

to generate or collect ideas, prioritize them and determine through
consensus a reasonable course of action in a timely manner. NGT is can
be most usefully employed when the problem to be resolved is complex,
when the group is under time pressure, when there are a large number of
inputs to be considered or when discussing and prioritizing sensitive
issues. The technique is normally employed in a group setting, however
there are many variations of the technique which can involve computers
and other means of gathering input. This technique involves the following
steps:

Step One: Idea Generation. The facilitator presents the purpose of the
meeting which is normally to come to consensus on a decision affecting
those participating in the meeting. The meeting may be called to
generate ideas and a resolution strategy for a quality or productivity
problem affecting the group members. The ground rules for participation
are presented and time is alloted for group members to silently record
ideas on paper individually without comment.
Step Two: Round Robin Silent Reporting of Ideas. Ideas are collected by
the facilitator. Two methods are commonly used (1 ) if the ideas are
sensitive or if the quantity of participants is large, the facilitator collects
the ideas and records them individually and anonymously for the gorup,
or (2)
Page 233

each person can present their ideas one at a time in turn allowing no
evalua~ or prejudement by other team members and the facilitator
records them.

Step Three: Clarification of Ideas And Group Discussion. Once all ideas
have been recorded, each one is discussed for understanding,
clarification, and to combine ideas that are duplicates.

Step Four: Ranking of Ideas. The ideas are then priortized by each
participant. There are many variations on ranking, the most common
being simple or weighted voting. The goal of this step is to use a ranking
technique to reach consensus amoung the group prioritization of the
items on the list.

Step Five: Implementation. Once an idea is selected for recommendation

or implementation, the group works together to develop the
implementation plan and establish the expected timeline for results.

Due to the high level of involvement of every member of the group during
the steps of NGT, the technique tends to produce high quality, consensus
decisions. Figure 7.3 summarizes the steps of the NGT.
Figure 7.3 Nominal group technique
Page 234

7.5 BENEFITS OF THE QUALITY ERROR REMOVAL

TECHNIQUE

The quality error removal technique provides a framework, principles,

and guidelines to a group of employees who voluntarily work together to
select and solve key problem(s) affecting an organization’s work unit or
task. Organizational goals are broken down into small tasks at the
operational level, and continuous effort is applied to improve productivity
and quality within each work unit.

When implemented in the work environment, the QER technique

provides the following benefits.

1. The QER technique improves quality and productivity at the

source of production or service.
2. It provides the basis for dividing large work contents into small
achievable tasks that are manageable by work groups.
Organizational goals are clearly simplified into small tasks at the
operational level. Work groups assume total responsibility for their
quality and productivity and feel an integral part of the goal setting
process and the end results.
3. The technique improves employee morale and job satisfaction. It
provides the basis for employees to assume total control at the
source of production. Problems are solved through a
brainstorming approach at a much faster pace. Sources of help
are readily available to work group team members.
4. The QER technique improves communication channels at all
levels of the organization. Management is viewed as part of the
team effort to remove the obstacles that affect the quality of
production and services.
5. The greater sense of control provided through the QER technique
improves employee commitment, promotes a sense of dedication,
yields fewer turnovers and a lower absenteeism rate, and provides
good feelings about job security.
6. The improved quality and productivity obtained through the QER
technique translates to more profit for the organization through
product or service cost reduction and lower prices paid by
customers for goods and services offered.
Page 235

7.6 QER TASK BOUNDARIES

The task boundaries involved with the use of the QER technique are
specified in Figure 7.4.

Figure 7.4 QER task boundaries.

7.7 QER KEY PRINCIPLES AND GUIDELINES

The following are the key principles and guidelines used by the quality
circle team.

7.7.1 Teach Basic Job Skills and Cross-Train for Multiple Skills
Both employees and management will be convinced that productivity and
quality improvement is possible in an organization and within each task
unit, once everyone involved understands how the job should be
performed to deliver a good product. Everyone also understands the
nature of the product or services being delivered. Two types of training
are encouraged: formal training through a company educational program
or an outside institution, and training by peers.
Page 236

7.7.2 Encourage Decision Making and Problem Solving at the

Source of Production or Services
At the operational level, the QER teams select their own problems on
which to focus and decide how to attack the bottleneck issues that are
preventing productivity and quality improvement. The team identifies
problems over which there is control. All members of the team freely
contribute ideas and reach a consensus on the best possible solution.
The brainstorming technique is highly encouraged. The following steps
are followed to understand the cause and effect of a key problem.

1. Precisely define the problem.

2. Draw a flow diagram, and label all categories.
3. Brainstorm to identify the root cause of the problem.
4. Use Pareto diagram to select a problem on which to focus.
5. Obtain consensus on a solution.
6. Implement the solution and follow-up on issues.

7.7.3 Encourage Productivity and Quality Improvement at the

Source of Production or Service
Each product or service inspection is done at the source. Inspection is on
the line at the task level. Members of the QER team perform inspection of
their own work. Quality and productivity errors are resolved by joint effort
among the team. Teams have checkpoints to review all outgoing finished
products. Any member of the team can call for group help to reach a
consensus on key problems quickly. Feedback mechanisms between
each QC team member are immediate. Team members are viewed as
teachers and error-correction masters.

7.7.4 Encourage the Following QC Team Characteristics

All the members of the team clearly understand and agree on common
goals. A forum exists for the sharing of ideas; there is a high level of
communication among team members, and everyone participates with
enthusiasm. Supervisors or managers support the team to resolve
problems when called upon. Reward and recognition are shared among
team members.
Page 237

Figure 7.5 Implementation steps for the QER technique.

Figure 7.6 Labor productivity values for groups 1 and 2.
Page 238

Figure 7.7 Total productivity values for groups 1 and 2.

Figure 7.8 Labor productivity values for check processing task.

Page 239

7.7.5 Clear Definition of Roles and Responsibilities of the QC Team

The definition of the roles and responsibilities are as follows:

Teacher: the person who trains team members for the skills needed to
perform the task. At one stage or another, everyone on the QC team is a
teacher.

Team leader: the person who leads the team through the process of
resolving a key problem. The team leader is chosen by voluntary means.
Each member of the QC team picks up leadership on a rotational basis.

Team members: a group of people who participate in the problem solving

and resolution process. The team meets regularly at specified times and
a specified location to provide a consensus that resolves problems
related to their tasks.

Facilitator: a team member who records all the team’s progress, keeps
records of the agenda, and assists the team leader in accomplishing the
stated objectives and goals of the QC team.

Team correction master: any member of the team who identifies a quality
error in the output produced by other team members. Such a member
ensures that the error is corrected at the source of production or service.
All team members participate in a random and revolving inspection
process to help detect quality errors.

Team presentations: presentations to management on team

accomplishments are rotated among team members. The presenter
introduces team members at the start of the presentation. The agenda
and the presentation package are jointly prepared by all members of the
team.

7.8 IMPLEMENTATION METHODOLOGY

The six steps shown in Figure 7.5 are suggested for the implementation
of the QER technique.
7.9 CASE STUDY: IMPLEMENTATION OF THE QER
TECHNIQUE IN AN ASSEMBLY TASK

The quality error removal technique was implemented at a manufacturing

plant that produces printed circuit boards to customer order. Two groups
of five subjects each were studied. The groups initially performed the
Page 240

Figure 7.9 Percentage of defective checks attributable to human error in

performing the check processing task.

printed circuit board assembly tasks without any formal training for the
QER technique. After a period of 5 weeks, the subjects were trained on
how to use the QER technique. The assembly process of printed circuit
boards involved the normal insertion of components, such as transistors,
diodes, modules, resistors, and capacitors, into an empty printed circuit
board (PCB).

The work area was in an approved electrostatic discharge area that

consisted of a grounded workbench, chair, tools, and a light box. The
manual assembly process started with the verification of paperwork and
parts. The component placement list (CPL), pick list, routing, part
numbers, engineering change level, serial numbers, templates, and any
special instructions were checked before assembly. The foil, which was a
blueprint of component insertions, was placed on the light box. The foil
contained the outline of two boards. The components were manually
inserted one at a time, according to the foil. Upon completion of both
cards, they were each verified with the CPL template. If any rework or
scrap was to be done, it was performed in a manner similar to that of
insertion. When the printed circuit boards were completely assembled
and verified, they were manually placed into trays.
Page 241

7.9.1 Measurement Method for Productivity

The task-oriented total productivity measurement (TOTPM) model
developed by Edosomwan (1985) was used in the case study. A brief
description of TOTPM model is given below (i = 1, 2, . . ., n; j = 1, 2,
. . . .,m; and z = 1, 2, . . .,k):

where:

value of (finished units produced +

Total
value of partial units produced +
measurable
other output associated with units
output =
produced)
value of (labor + materials + capital
Total + energy + robotics expenses +
measurable computer operating expenses + other
input = administrative expenses + data
processing expenses)
Total-factor productivity is the ratio of total measurable output to the
associated labor and capital input.

Partial productivity is the ratio of total measurable output to one class of

input. For example,

Page 242

The values of the output and input are expressed in constant monetary
terms of a reference period. In the case study, the complexity factor of
printed circuit boards and the proportional contribution to the total number
of printed circuit board insertions was used as an allocation criterion for
overhead expenses. Deflators were not required because the study
period of 10 weeks was not long enough to be affected by significant
price changes for input components.

7.9.2 Results
As shown in Figures 7.6 and 7.7, the implementation of the QER
technique in a manufacturing task improved labor and total productivities.
Perhaps the great success can be attributed to the teamwork approach
adopted by the QC team, willingness to train each other for the skills
required, and a strong ability to quickly reach a consensus to resolve
problems at the source of production. Equally important was the high
motivational level experienced by all team members. The feeling that the
members of the team had total control over what they do and were able
to take total responsibility for decision making also contributed to the
gains in productivity.

7.10 CASE STUDY: IMPLEMENTATION OF QER

TECHNIQUE IN A BANK CLERICAL TASK

The quality error removal technique was implemented at a bank with

specific attention to a check-processing task. This involved using a batch
line processing approach to aid clerical workers in processing checks
based on the priority of first in, first out. The task was performed
manually. Before learning the QER technique, 37 members of the clerical
staff performed this task. The labor productivity and defects per thousand
checks processed were assessed without the training for the QER
technique. The clerical staff members were then trained for the QER
technique for a period of 8 weeks (on-the-job training accounted for 7
weeks and classroom education for 2 week).

7.10.1 Results
As shown in Figures 7.8 and 7.9, implementation of the QER technique in
a bank check-processing task improved labor productivity and improved
the quality of the work in the processing unit. The QER members were
able to identify and resolve such problems as extra wasted transportation
and
Page 243

motions that added no value to their work. They were able to resolve
bottlenecks that had an impact on the overall smooth flow between
clerical personnel. The difficulty in processing each type of check was
classified, and a solution strategy was developed and implemented.

7.11 PROBLEMS ENCOUNTERED DURING

IMPLEMENTATION: SUMMARY

The problems associated with the implementation of the QER technique

may vary from one organization to another, depending on the nature of
task performed, the QC team composition, and the levels of management
support. Based on implementation in a manufacturing and a service task,
it was observed that friction among team members arose in some
situations. It is interesting that the team resolved all friction themselves.

It was also difficult for team members to accept and tolerate the rejection
of ideas by management. This problem was resolved through ongoing
communication between the QC team and management.

Problems also arose when the team had too many problems to resolve or
too little to keep them busy. The team agenda improvement process
helped resolve these problems.

As demonstrated by the case studies, the QER technique is a powerful

tool for the improvement of productivity and quality at the source of
production or service. The technique has a great potential for application
in both the manufacturing and the service work environment. It is very
inexpensive to set up and maintain the QER technique. QER basic
strategy rests on providing decision latitude, control, and ownership to
those charged with task responsibility. Management support, training,
and other resources required are necessary for the successful
implementation of the QER technique. The QER is unique and works
best when the QC team is limited to a small group.
Page 244

REFERENCES

Dewar, D. L., 1980. The Quality Circle Handbook. Quality Circle Institute,
Red Bluff, California.

Doyle, M., and D. Straus 1978. How to Make Meetings Work. Playboy
Paperbacks, New York.

Edosomwan, J. A., 1983. Quality Error Removal Technique. Unpublished

manual, IBM Data Systems Division, New York.

Edosomwan, J. A., 1985a. A task oriented total productivity measurement

model for electronic printed circuit board assembly. Proceedings First
International Conference on Electronic Assembly, October 7–9, 1985,
Santa Clara, California.

Edosomwan, J. A., 1985b. A methodology for assessing the impact of

computer technology on productivity, production quality, job satisfaction
and psychological stress in a specific assembly task. Doctoral
dissertation. Department of Engineering Administration, The George
Washington University, Washington DC, 20052. Research sponsored by
IBM Corporation and the Social Science Research Council (U.S.
Department of Labor).

IBM Data Systems Division, 1982. Teaming up for Quality: Quality

Excellence Teams Education Guide. Poughkeepsie. New York, 12602.

Robinson, M., 1982. Quality Circle, A Practical Guide. Gower Publishing,

Aldershot, England.
Page 245
Chapter 8
Productivity and Quality Improvement Strategies and
Techniques

A major challenge facing organizations is how to improve productivity and

quality without having to make a major capital investment or increase the
number of people required to perform a given task. In recent years,
several ‘‘back to basics” techniques, such as the just-in-time (JIT),
continuous flow manufacturing (CFM), stockless production, and process
analysis technique (PAT), have received significant attention in literature
and in some cases in actual implementation. The JIT concept has
received more attention in Japan than anywhere else in the world.
Schonberger (1982) details nine hidden lessons to be learn from the
Japanese approach. Significant attention has also be focused on the
application of robotic devices, computer-integrated manufacturing (CIM),
computer-aided manufacturing, group technology, and other forms of
techniques, such as process automation that eliminates defects. This
chapter presents the factors affecting employee job performance and
productivity and a discussion of key productivity and quality improvement
techniques. Emphasis is placed on the production and service
improvement technique (PASIT).

8.1 FACTORS AFFECTING EMPLOYEE JOB

PERFORMANCE AND PRODUCTIVITY

Sutermeister (1973) identified various factors affecting employee job

performance and productivity. These factors are shown in Figure 8.1.
Page 246

Figure 8.1 Major factors affecting employee job performance and

productivity. Employees include executives and managers, supervisors,
professional staff, such as engineers and scientists, other white-collar
workers, and blue-collar workers. (Source: R. A. Sutermeister, 1976.
People and Productivity, 3rd Ed. McGraw-Hill, New York.)
Page 247

The factors shown in each segment affect factors in the corresponding

segment of the next smaller circle; they may also affect and be affected
by other segments in the same circle or circles. Improving productivity will
improve these various factors to favor continued productivity
improvement as desired even by the employees themselves. However,
the rise is not to be looked upon as self-generating or resulting from
momentum. Productivity rises from the continuous application of human
thought and effort to the end, not that employees work harder, but that
they work better with better tools, materials, or methods. It is important to
note that people in an organization give their best to the job to be done,
in a sustained and natural way, when the consequences of so doing are
seen to be rewarding and meaningful. Tangible rewards—the shared gain
of higher productivity—are part of a total pattern. Intangible
consequences, too, yield satisfactions to which few people are indifferent:
the pride of accomplishment, the zest of working with others in satisfying,
productive effort, and the recognition of common ground and common
goals. Improving the conditions of work, methods, tools, equipment, and
good management will contribute to the productivity of employees.

8.2 PRODUCTIVITY AND QUALITY IMPROVEMENT

TECHNIQUES

Sumanth (1984, pp. 318–319) reported 50 different techniques of

productivity improvement that were obtained from a survey of the
literature conducted by Omachonu (1980). These techniques are listed
below:*

1. Technology-based techniques

1. Computer-aided design (CAD)

2. Computer-aided manufacturing (CAM)
3. Integrated CAM
4. Robotics
5. Laser beam technology
6. Energy technology
 7. Group technology
8. Computer graphics
9. Emulation
10. Maintenance management

*Source: Sumanth, D. J., 1984 Productivity Engineering and

Management, McGraw-Hill Book Company, New York, pp. 318–319.
(Reprinted with permission.)
Page 248

1. Rebuilding old machinery

2. Energy conservation

1. Employee-based techniques

1. Financial incentives (individual)

2. Financial incentives (group)
3. Fringe benefits
4. Employee promotions
5. Job enrichment
6. Job enlargement
7. Job rotation
8. Worker participation
9. Skill enhancement
10. Management by objectives (MBO)
11. Learning curve
12. Communication
13. Working condition improvement
14. Training
15. Education
16. Role perception
17. Supervision quality
18. Recognition
19. Punishment
20. Quality circles
21. Zero defects

Product-based techniques

1. Value engineering
2. Product diversification
 3. Product simplification
4. Research and development
5. Product standardization
6. Product reliability improvement
7. Advertising and promotion

Task-based techniques

1. Methods engineering
2. Work measurement
3. Job design
4. Job evaluation
5. Job safety design
6. Human factors engineering (ergonomics)
7. Production scheduling
Page 249

1. Computer-aided data processing

Material-based techniques

1. Inventory control
2. Materials requirement planning (MRP)
3. Materials management
4. Quality control
5. Material handling systems improvement
6. Material reuse and recycling

8.3 PRODUCTION AND SERVICE IMPROVEMENT

TECHNIQUE (PASIT)

Edosomwan (1983) developed the PASIT technique for improving

productivity and quality in both service and manufacturing organizations.

8.3.1 PASIT Defined

According to Edosomwan (1983), PASIT is an on-going process that
involves the organized use of common sense to find easier and better
ways of performing work and streamlining the production and service
processes to ensure that goods and services are offered at a minimum
overall cost. Improved productivity and quality is obtained through the
elimination of waste, such as scrap, unnecessary automation, rework,
inspection, excess work-in-process inventory, wasted motions and
transportation, engineering changes to product specification, and other
forms of waste that have no value added to the goods and services
offered. The PASIT concept is shown schematically in Figure 8.2.


8.3.2 Benefits of PASIT

The implementation of PASIT in the work environment can provide the
following benefits:

1. Obtain optimal balanced service and production time with no

waste.
2. Improve product and service quality and minimize inspection and
repair loops.
3. Improve customer service time through reduction of improved
service and product cycle time.
4. Reduce inventory through elimination of work-in-process at each
service or production station.
Page 250

Figure 8.2 The PASIT concept

1. Reduce process time for each task through elimination of

unnecessary errors, steps, and handling defects.
2. Improve employee morale, job safety, and job satisfaction through
elimination of repetitive work, service and production bottlenecks,
reduction in training time, and reduction in the confusion and
 interdependencies among unnecessary functional tasks.

8.3.3 Major Principles behind PASIT

In order for PASIT to provide the anticipated and stated benefits, the
following seven principles must be adopted within the organization:
Page 251

Principle 1. Management and employees must have the positive attitude

that productivity and quality improvement can result from the organized
use of common sense to address service and production problems.
Management support must be shown through practice and an
organization policy statement.

Principle 2. A total teamwork approach among functional organizations,

such as research and development, marketing, personnel, purchasing,
manufacturing, information systems, quality, facilities and distribution,
maintenance, finance, production control, service centers, engineering,
and other functions within the work organization, must be used to
address all problems.

Principle 3. Strive for total productivity and quality improvement at the

source of production or service. Discourage heavy reliance on inspection
and other non-value-add operations within the work organization. The
required basic training must be provided to obtain good quality goods and
services at the source of production or service.

Principle 4. Encourage reduction in the layers of management at all

levels. Give ownership to those charged with task responsibility and the
control and support needed to resolve daily service and production
problems. Too many levels of management cause additional bottle-necks.
A level of management should be instituted within the organization only if
it will add value in terms of the improvement of the production and
service function.

Principle 5. Access the total impact of all service and process changes,
policy changes, and implementation of new ideas and techniques. The
new process, service, ideas, organization, or management must be better
than the one it replaces, considering all implications.

Principle 6. Institute a total reward system based on contributions in

improving and managing all aspects of a task to obtain acceptable goods
and services. Pay for performance in total technical and people
management. Avoid a crisis loop reward system that affects the morale of
the employees.

Principle 7. Production and service errors that affect productivity and

quality are controllable through common sense and good judgment. The
production rate must be equal to the consumption rate.

8.4 PASIT IMPLEMENTATION METHODOLOGY

The eight-step approach for implementing PASIT in a production and

service organization is shown schematically in Figure 8.3. Each step will
now be described.
Page 252

Figure 8.3 Steps for implementing the PASIT concept.

Page 253

8.4.1 Establishing PASIT Teams and Leadership Council

The PASIT teams should be made up of representatives from the working
levels. Each functional area must be represented. The team members
must possess, through training, the ability to resolve problems in a timely
manner. They must be equipped with basic training about cause-and-
effect relationships, priority mapping, value analysis, task simplification,
process flow mapping, and other commonsense approaches to improving
service or production environments. The PASIT team members should
have the technical responsibility for performing the variety of activities
specified in Figure 8.4. The PASIT council management role is to provide
technical leadership, facilitate people involvement, review
accomplishments, and clear communication up and down within the
organization. The council should be made up of senior managers and
specialists with training in managing productivity and quality improvement
projects. The role of the council is shown schematically in Figure 8.5.

Figure 8.4 PASIT team members’ roles.

Page 254

Figure 8.5 PASIT leadership council role.

8.4.2 Educating Everyone on the PASIT Concept and Principles

Everyone involved with the task of implementing PASIT must be trained
about the key principles and concepts. Four types of recommended
session contents are presented in Table 8.1. The education sessions
enable everyone to be thinking and talking about productivity and quality
improvement in the same terms.

8.4.3 Understanding Current Service and Production Parameters

As shown in Figure 8.6, understanding current service and production
parameters consists of six basic steps:

1. Orientation to people, processes, and procedures

2. Information gathering
Page 255

Table 8.1 Recommended PASIT Education Format

Session
Level durationRecommended PASIT training content
(hr)

Upper or senior Overview of PASIT technique and benefits;

4
management potential areas of application; PASIT principles
PASIT concept and benefit; implementation
requirements; how the concept works; managing
Middle management 8
PASIT projects; administering the reward from
PASIT
Detailed concept and methodology for
implementing PASIT;
problem-solving framework; process-analyzing
First-line management, framework;
staff, specialist, simulation of processes; process improvement
24
engineers, and process tools; improvement techniques and steps;
analyst justification and impact assessment tools;
quality error removal technique;
productivity improvement, measurement,
planning, and evaluation tools
Implementing PASIT at work station;
Operators, production
examples of PASIT applications;
specialists, service 16
PASIT problem-solving framework;
technicians
PASIT benefits in task improvement
Page 256

Figure 8.6 Elements involved in operations review.

1. Interviewing
2. Preparing work distribution charts
3. Preparing process flow charts
4. Developing task element lists

The main accomplishment in this step should focus on the detailed

review of tasks performed by individuals, work groups, departments, and
functions; the methods used; and the flow of work from one task to
another and among the members of the work group. It is also important
to identify the volume of work and the frequency, rates, and timing
involved in each task performed. In order to ensure adequate coverage of
all key information, it is important to have a data-gathering checklist
similar to that shown in Table 8.2.

Orientation
The orientation phase enables the analyst to know all the key processes,
procedures, and people in the various organizations. The functions for
each work group must be clearly understood. Attention must also be paid
to interfunctional dependencies.
Page 257

Table 8.2 Data Collection Checklist for Operations Review

Impact Value adding or non-

Process Item Responsibility
(usefulness) value adding

Task elements by key areas

Procedures and policies
Data-reporting format
Organization charts
Responsibilities by key

areas
Layout of work areas
Equipment or tools in use
Cost tracking system
Existing standards for work
Forms in use
Key processes
Filing system
Work load volume by key

areas
Yield indicators by key

areas
Production indicators by key

areas
Work assignment system
Product or service

distribution system
Log books used in processes
Work distribution charts
Flowcharts for key

processes
Personnel names by key
areas
Organization rules and

regulations
Computer information type
Cycle time of product or

service
Task distribution frequency
Others
Page 258

Information Gathering and Interviewing

The objective is to get all facts on the task performed by asking ten basic
questions:

1. What is it?
2. What does it do?
3. Who does it?
4. What does it cost?
5. Where it is being done?
6. What is it worth?
7. When is it done?
8. Why it is done?
9. Who has the authority to say so?
10. Who has ownership for it?

The interviewing process should be structured to obtain an opinion from

every level of employees and management. The important point is to
ensure that the analyst works with facts, not opinions. A scheduled time
for interviews by a random selection process should also be encouraged.

Work Distribution Charts, Process Charts, and Task Elements

Work distribution charts, process flow charts, and task element recording
formats are organized ways of recording the information gathered from
questionnaires, interviews, and process procedures. These charts enable
analysts to identify the various task activities to be measured and to
estimate the time spent by each individual or work group on each task.
Flow charts show the sequence of steps required to perform a task. Flow
charts also provide the basis for understanding the relationship between
the task and the processing limes. Task elements enable analysts to
determine the extent of skill utilization, work specialization, delays,
transportation required, and other details necessary to pinpoint and
understand the process parameters.

8.4.4 Operations Analysis, Focus Problem Selection, and Process

Simulation
In performing operations analysis, an analyst starts with a pilot task or
product or service and obtains the following additional information:
Page 259

1. Develop task flow diagram.

2. Record the processing times for each task.
3. Record setup time for each task.
4. Identify all transportation logistical data.
5. Simulate the parameters to understand input and output from each
sector and leverage area. Simulation also identifies the impact of
changes in processing times on other parameters.

The analysis phase provides the basis to determine bottlenecks, rework

loops, capacity limitations, and resources constraints. The four major
analysis results to be obtained by asking four key questions are
presented in Figures 8.7 through 8.10.

Figure 8.7 Analysis of who is doing the task.

Page 260

Figure 8.8 Analysis of what task is done.

8.4.5 Current Operations Impact Assessment

In this step, the suitability of the current mode of operation is assessed.
The feasibility and suitability of all parameters are determined based on
cost, value-add, time, and impact on quality. Intangible elements, such as
job satisfaction and morale, should also be taken into consideration.
Page 261

Figure 8.9 Analysis of how the task is done.

8.4.6 Operations and Service Improvement

After completing the impact assessment of the current method, all new
techniques and ideas for improvement should be formally documented.
Each task must be carefully analyzed. In order to decide about a new
improved method for operation, six general approaches should be
considered:
Page 262

Figure 8.10 Analysis of where the task is done.

1. Eliminate and minimize the number of task elements within given

operation.
2. Maximize the use of all resources available.
3. Combine and rearrange the sequences of processes.
4. Substitute and simplify methods of performing a given task.
5. Change the sequence for performing a given task.
6. Use a new technology or tool to replace the method of performing
a given task.
Page 263

8.4.7 Testing Selected Improvement Strategy

Different improvement strategies can basically be evaluated using the
following criteria:

1. Cost and savings related to the specific alternative.

2. Quality improvement related to the specific alternative.
3. Job satisfaction and morale improvement related to the specific
alternative.
4. Capability of the user to adapt to the specific alternative.
5. Implementation requirements of the specific alternative.
6. Time required to meet all objectives specified in the specific
alternative.
7. Conformation of the specific alternative to established policies and
standards.
8. Specific known exposures related to a specific alternative.
9. Justification of new alternative tools using the total productivity
measurement approach.
10. Justification of a new alternative using cost-benefit analysis and
other financial measures.

In situations in which intangible benefits outweigh tangible benefits,

managerial judgment should be used to select the best alternative.

8.4.8 Implementation of Improvement Methods

The one key ingredient of the PASIT concept is that it rests on teamwork
in all phases. In order to implement new ideas, the approval of all key
functional representatives and management must be obtained. The new
method must be reviewed at all levels and revised based on useful
suggestions. Specific tasks should be assigned to specific people to
implement the aspects of the new alternative. Implementation of the
PASIT concept and approach is not a one-time action; it is an on-going
process for production and service improvement as long as the
organization exists.
Page 264

8.5 BASIC TOOLS NEEDED FOR PASIT IMPLEMENTATION

8.5.1 Processing Time

Processing time is the amount of time required to perform a given task.
The usual source for this time is the time standards prepared by industrial
engineers.

8.5.2 TAKT Time

TAKT time is the amount of time required to perform each task and obtain
the total volume required by a sector within a specified time period.

8.5.3 Capacity
This is a measure of how much a given production or service unit can
offer given all the resources available at the unit in a specific time period.

8.5.4 Utilization
This is a measure of how well people, tools, equipment, materials, and
other resources are utilized.

8 5.5 Yields
This is a measure of the quality of the output expressed in defects per
unit or the percentage of defective material in a sample.
Page 265

REFERENCES

Edosomwan J. A., 1983. Production and Service Improvement Technique

(PASIT). Unpublished manual. IBM Data Systems Division, New York.

Edosomwan J. A., 1985. A methodology for assessing the impact of

compute technology on productivity, production quality, job satisfaction,
and psychological stress in an assembly task. Doctoral dissertation,
Department of Engineering Administration, The George Washington
University, Washington, DC. 20052. Research sponsored by Social
Science Research Council (U.S. Department of Labor) and the IBM
Corporation.

Edosomwan, J. A., 1986a. Productivity management in computer-aided

manufacturing environment. Proceedings of First International
Conference on Engineering Management, September 22–24,
Washington, DC.

Edosomwan, J. A., 1986b. Technology impact on the quality of work life

—a challenge for engineering managers in the year 2000. Proceedings of
First International Conference on Engineering Management, September
22–24 Washington, DC.

Kendrick, J. W., in collaboration with the American Productivity Center,

1984. Improving Company Productivity with Case Studies. The Johns
Hopkins University Press, Baltimore, Maryland.

Mali, P., 1978. Improving Total Productivity: MBO Strategies for Business,
Government, and Not-For-Profit Organizations. John Wiley, New York.

Omachonu, V. K, 1980. Productivity improvement: Conceptual

framework. model and implementation methodology for manufacturing
companies. M.S. thesis, Department of Industrial Engineering, University
of Miami. Coral Gables, Florida, July.

Schonberger, R. J., 1982. Japanese Manufacturing Techniques: Nine

Hidden Lessons in Simplicity. Free Press, New York.

Sumanth, D. J., 1984. Productivity Engineering and Management.

McGraw-Hill, New York.

Sutermeister, R. A., 1976. People and Productivity, 3rd Ed. McGraw-Hill,

New York.
Page 266
Page 267
Chapter 9
Techniques for Improving Employee Productivity, Morale
and Employment

This chapter presents key aspects of individual employee productivity

including work simplification and the impact of empowerment and
motivation on employee morale. Techniques for improving morale are
discussed and concept of employee empowerment is introduced. The
impact of technology and task design on productivity and quality is also
discussed.

9.1 WORK MEASUREMENT AND JOB SIMPLIFICATION

PROGRAM

One of the objectives to be met when attempting to increase individual

productivity is a better set of measurements of activities. In order to deal
with improvements there must be bench marks and yardsticks in form of
indexes, standards, and units for all activities.

Defined in its broader sense, work measurement is a means of

determining an equitable relationship between the quantity of the work
performed and the number of labor hours required for completing that
quantity of work. The establishment of measurement is for the purpose of
planning, scheduling, and controlling work. Organizations should tailor
their staff functions to have
Page 268

work measurement techniques that will help to achieve the following

objectives:

Acquaint staff personnel in charge with more formal methods of

productivity management and labor performance.

The standard developed by work measurement should include standard

allowances for rest, delays that occur as part of the job, time for personal
needs, and, where the work is heavy, an allowance for personal fatigue.

Employees should be involved. They should be shown the part to play if

formal methods are to be used successfully.

All participants should be given the confidence that the formal methods
do work and should be used.

If carefully implemented, a work measurement program will help an

organization to achieve the following: A tool for decision making
Data provided for scheduling day-to-day operations
A basis for labor cost control The method of doing work must be
subjected to review and study, with a view of making the process simpler,
more nearly perfect, and more productive—these can be termed work
simplification.

Work simplification is the systematic investigation and analysis of

contemplated and present work systems and methods for the purpose of
developing easier, quicker, less fatiguing, and more economic ways of
providing high-quality goods and services. Consideration is given to
improving the product or service, raw materials and supplies, the
sequence of operations, tools, work place, and equipment and hand and
body motions. It is a systematic approach of defining, analyzing
alternatives, and documenting work methods. Some of the techniques
used for work measurement and job simplification are:

1. Process charts and flow diagrams

2. Operation charts
3. Micromotion study
4. Principles of motion economy
5. Job simplification
6. Time standards
7. Value analysis
Page 269

1. Operation research techniques

2. Human factors
3. Standard data (MTM)
4. Rating schemes
5. Stopwatch method
6. Work sampling

A more detailed theoretical discussion of these techniques can found in

the works of Barnes (1968) and Mundel (1970). The implementation of a
work measurement and job simplification program should include a
brainstorming session that provides an opportunity for input from all
employees.

9.2 MANAGEMENT DEVELOPMENT PROGRAM

There has been a growing trend in organizations to focus on external

management development activities. This can be attributed to the fact
that there is growing dissatisfaction with the results obtained from the job
management training programs. The dissatisfaction arises because these
programs are not tailor-made to the individual organization and they do
not bring about the expected changes in managerial behavior. Also, the
manager who would improve individual productivity must select with
extreme care the people who are to supervise workers. Those selected
must be carefully and continuously trained in the modem concepts of
supervision and management. The truculent, ignorant, untrainable, and
psychologically disturbed should never allowed to supervise the work of
other people, yet many organization select supervisors by the most
random methods, train them not all, and wonder why productivity does
not evolve.

The educational function of the management can be used to establish a

climate of receptive attitudes toward change and to facilitate
communications between employees. Change is not always welcome by
even the most conscientious supervisor or worker. No matter how
capable the manager, he or she will encounter resistance to change.
Resistance to change, a well-established psychological trait, thrives on
fear and apprehension and is nourished by poor communication. The
effective manger is well trained and overcomes resistance to change
through effective communication. Communication and the establishment
of good rapport can be greatly helped by acquainting the manager with
terminology and techniques.

Page 270

There have been instances in which a lack of understanding can lead to

total rejection of a new concept. Many managers will not accept what
they do not understand and appreciate. A manager must be made aware
of the approach to problem solving so that he or she can appreciate a
new system design or improved method.

If the management development programs conducted are to achieve their

purpose, the subject matter must acquaint participants with well-
explained principles and techniques. Management development should
explain the type of policies to institute, when to institute them, and how.
Some examples of the areas for management training are:

1. Basic fundamentals of management directing, planning, staffing,

controlling
2. Managing the leveled employee
3. Employee development guidelines
4. Company operating policies
5. Motivation techniques
6. Problem-solving techniques
7. Productivity and quality improvement techniques
8. Salary and benefit administration
9. Handling grievances, sick leave, income, disabled employees, job
seniority, job training, job posting, layoffs, jury duty, and others
10. Investment strategies and competition

Mali (1978, pp. 173–177) discusses six key supervisory actions for
developing productivity mindedness:

1. Supervisors must give facts and information to counter negative

attitudes.
2. Supervisors themselves must be examples of productivity
mindedness.
3. Give productivity orientation and training to employees.
4. Communicate concern and the need for productivity improvement
to employees.
5. Allow participation in productivity decision making.
 6. Use organized programs.

Goodwin (1968, pp. 530–543) also pointed out the need for a people-
oriented approach to improvement management. He emphasized that
‘‘people are our most important asset and their attitudes and motivational
Page 271

Figure 9.1 Model for “Improvement Management” (Source: Goodman,

H.F., 1968. Improvement must be managed. Industrial Engineering, Vol.
10, No. 11, pp. 538–543. Reprinted with permission)
Page 272

drives are a major factor in any successful business.” The improvement

management framework suggested by Goodwin is shown in Figure 9.1.

9.3 MOTIVATION OF EMPLOYEES

For several decades, productivity and quality improvement have been

linked to how well employees are motivated to do their jobs. At the
organizational level, several attempts have been made to arrange job
conditions to enhance the coincidence of needs and satisfaction for a
worker and the organization. In a highly technologically complex
environment, motivating workers is difficult because motives have
become more complex and diffused. A person’s job is more than an
opportunity to earn money with which to satisfy physical wants and
needs. The need now also includes, among other things, social
experience that contributes to satisfy other noneconomic wants and
needs brought to the job. Different organizations with different tasks,
different competitive environments, and different worker personal needs
require different approaches to motivating.

In general, motives are viewed as reasons for behavior. They direct

people toward goals and affect both their ability and their will to perform
the job. Motivation can be defined as motive strength to satisfy a need.
Since human behaviors are complex, what motivates individuals is
therefore based primarily on certain assumptions about human behavior.
The three forms of motivation widely used are presented in Table 9.1.
Some of the motivation techniques proposed in the literature are
summarized in Table 9.2. In this high-technology era, the way jobs and
tasks are designed and the opportunities that arise from such design may
be one of the most substantial influences on the motivation of workers
and the productivity of individuals and the organization. Job design
practices should be based on a general approach that will provide
opportunities for individual need satisfaction and goal achievement.

9.4 EMPLOYEE EMPOWERMENT

Employee empowerment is a recent expansion on a concept from the
early 1970s called participative management. In the early 1970s, their
was a shift in traditional management styles from autocratic to
participative. The concept involved managers and organizational leaders
allowing employees to participate in decisions that affected their work
environment. This concept was initially resisted by many in the
management community and
Page 273

Table 9.1 Three Approaches to Motivation

Traditional economic Human relations Self-drive

incentive approach approach approach

Significant
1. People work only for 1. People want
managerial 1. People like to work
money meaningful work
assumptions
2. People need 2. Individuals
2. People have no self-
comfortable work possess self-
direction
environment direction to work
3. People need 3. Ned for good 3. People have self-

leadership leadership control
4. Happy employees
4. People dislike work 4. Creative mind
will produce more
5. Economic incentive 5. Happy employees
will keep people on the will be committed to
job to perform the organization
Significant
1. Managerial
rewards 1. Good salary 1. Personal growth
recognition
offered
2. Opportunity to
2. Economic awards 2. Good salary
use skill
3. Good working
3. Achievements
condition
4. Good fringe
4. Recognition
benefits
5. Good salary and
5. Peer recognition
benefits
1. Piecework system 1. Good management 1. Autonomy
Methods for
2. Good organization 2. General
using rewards 2. Simple tasks
policies supervision
to motivate
 3. Close supervision 3. Open system
3. Fringe benefits
while performing task career policies
4. Teamwork 4. Goal setting
4. Clear instruction to 5. Considerate
5. Job content
perform task supervision
5. Focus on salary

administration
Significant
1. Physical need 1. Social need 1. Egoistic need
needs satisfied
2. Satisfaction from
2. Security need
wealth acquired
1. Productivity
1. Productivity
results bring
Impact 1. Job dissatisfaction increase from
additional
satisfaction
satisfaction
2. Lack of total 2. Participative 2. Participative
participation and management approach management in
commitment in most issues major issues
Page 274

Table 9.2 Summary of Some of the Motivation Techniques

Author (Year) Motivation Technique

Motivate workers through financial incentives; strong

Smith (1776)
enough to demonstrate monetary gains
Motivate workers through division of labor; divide work into
Taylor (1911) standards, assign pay to standards, and find an easy
procedure to reach standards
Motivate workers through job structure steps, assign money
Munsterberg(1913) rates to the steps, and provide merit evaluation when it is
recognized these jobs have been achieved
Motivate workers by providing opportunities that fulfill their
Maslow (1943) needs (physiological needs, safety needs, love needs, esteem
needs, and self-actualization needs)
Motivate workers by providing job content that will lead to
Herzberg (1959)
satisfaction
Motivate workers by giving managers a new view and set of
attitudes about people and their environment for best
McGregor (1960)
advancing goals of people and the organization: two sets of
theories, X and Y
Motivate workers by providing entrepreneurial development
McClelland (1961)
opportunities to experience high levels of achievement
Motivate workers by providing, in advance, opportunities in
Vroom (1964) which rewards are great and the probability of achieving
them is high
Motivate workers by planning and obtaining the closest
Mali (1972) possible alignment between employee expectations and
organizational objectives
Motivate workers by providing meaningful job content,
autonomy, ownership for results, and opportunities to fulfill
Edosomwan (1985)
their needs and that of the organization; reward all
accomplishment in a timely manner
Page 275

it resulted in power struggles between management and employees. As

the 1980s brought about a nationwide recession, participative
management expanded into the concept of total employee empowerment
and self-directed work teams. Increased levels of employee
empowerment generally allow a more streamlined management
approach with lower management-to-employee ratios, lower
administrative and overhead costs and fewer layers of management. The
elements of employee empowerment are presented in Figure 9.2.

Figure 9.2 Elements of Employee Empowerment Employee

empowerment is based on several tenants:

1. Employees are capable of making decisions with respect to their

immediate work environment, their own quality and productivity
levels and improvement in those areas.
2. Employees when given sufficient access to information and
training can generally make decisions that were traditionally made
by supervisors and managers.
Page 276

1. Employees when given more responsibility and accountability take

ownership for their work, work areas, and workmanship and do a
better job.
2. Employees generally have higher morale and make greater
contributions to the organization when given the authority to
manage and control their day-to-day environment.

It is basically a concept that empowers workers to manage and control

their personal and group work environment and to make decisions
regarding their quality and productivity requirements. It also involves
giving accountability and ownership for results to workers as well.
Statistics show that organizations that have highly empowered workers
tend to have higher levels of quality, productivity and customer
satisfaction. Employees tend to work collectively towards the elimination
of bureaucratic barriers and managerial constraints that keep individuals
from functioning at their highest level of capability and innovation.

9.5 MOTIVATING WORKERS IN A HIGH-TECHNOLOGY

PRODUCTION ENVIRONMENT

During the latter part of the nineteenth century, a new scientific

management had tremendous influence on the production environment.
Taylor, Gilbreths, and Gantt pioneered an approach that required job
specialization and piece rate as the means of payment of wages
Excessive job specialization, machine-paced jobs, and the use of piece
rates can be viewed as a temporary source of motivation. In a rapidly
changing technological environment, the individual source of motivation
is more than the opportunity to earn money or work on a specialized task.
Motivational factors should focus on both individual and company goals.
The job should be enlarged and enriched in the following two ways.

9.5.1 Total Vertical Job Enlargement and Enrichment

The total vertical job enlargement and enrichment (TVJEAE) process
involves both employees and management in planning, organizing,
performing, and improving the job content. Technology is viewed and
used under this situation as a mechanism to aid the production worker,
not as a mechanism to control the worker. The TVJEAE approach
believes in providing workers with total ownership and control over their
daily
Page 277

activities. Workers have latitude in making decisions to improve job

aspects that are impediments to their overall effectiveness.

Such items as machine speed can be adjusted by the worker to a

comfortable pace that permits overall satisfaction and productivity and
quality improvement. The TVJEAE brings most motivations into play.
Workers who have problems with such issues as technology user friend-
liness, pace, and task specialization have the opportunity to work with
management to resolve such issues under the TVJEAE concepts.

9.5.2 Total Horizontal Job Enlargement and Enrichment

The total horizontal job enlargement and enrichment (THJEAE) process
involves both employees and management in expanding job
responsibilities to include a greater variety of activities. THJEAE aims at
counteracting oversimplification and gives the worker an opportunity to
perform a more expanded work unit. THJEAE also helps to eliminate
monotony, a repetitive boring job, and specialization that may be caused
by technology applications.

In a technology production environment there are several factors that

strongly determine job satisfaction. Some of the key factors are job
content, employee decision latitude, responsibility, advancement,
recognition, employment security, and achievement. Working conditions,
salary, company policy and administration, and management programs
are other equally important hygiene factors. A comprehensive motivation
strategy in a technology production environment should rest on the
premise that Technology is a mechanism design to aid the worker, not to
control the worker.

There is freedom to use imagination and ingenuity in performing a task.

The opportunity exists for growth through meaningful assignment.

The opportunity exists to learn new skills and broaden a background on

an ongoing basis.
The opportunity exists to earn more money in recognition of
achievement.

The opportunity exists to maintain full employment and participate in the

decision-making process.

The elements involved in motivating workers in a high-technology

productivity environment are shown schematically in Figure 9.3.
Page 278

Figure 9.2 Elements involved in comprehensive motivation strategy in a

high-technology production environment.
Page 279

9.6 MORALE MANAGEMENT

The morale of employees and management can have an impact on the

productivity and quality of the work performed. Individuals with good
feelings and attitudes toward the job are bound to have a positive impact
on improving the overall effectiveness of the set of activities addressed.
The employee and management morale management program
(EMMMP) should focus on ongoing communication between
management and employees. Communication should be geared toward
revealing issues of importance to both employees and management that
affect their morale. A total team effort should then be used to provide
actions that are tailored to address individual concerns. Some companies
have a formal morale assessment program that provides the basis for
areas that need action plans. If daily ongoing communication is done
properly, a formalized morale assessment is really not necessary. A key
ingredient in EMMMP success is the ownership of morale improvement
by the management team. Each manager’s emphasis should be an
honest attempt to understand employee morale through informal and
formal discussions, through group discussions, and through a
participative management approach in performing daily duties. It is
recommended that ongoing feedback sessions be conducted between
employees and management regarding matters of concerns. A strategy
that works well is the continuous reinforcement of positive behaviors and
accomplishments. Positive feedback on problems resolved also shows
that someone cares. The EMMMP components and process are shown
schematically in Figure 9.4.

9.7 TECHNOLOGY FACTOR IN PRODUCTIVITY AND

QUALITY IMPROVEMENT

Technology can be defined as a mechanism for transformation in a

production or service process. It has the capability of affecting all levels
of contact in human endeavor. Between 1960 and 1986, technology has
been the primary factor impacting on productivity and the overall quality
of working life. Recent studies conducted by Edosomwan (1985) showed
that in areas in which robotics and computer-aided manufacturing
techniques were applied, productivity and quality improved significantly
(see Table 9.3).

Morrison and McKee (1978) also reported some expert views on the
contribution of technology to an increase productivity. As shown in Table
9.4, technology was reported to be the greatest contributor to the
productivity increase.
Page 280

Figure 9.4 Components and process of EMMMP.

Table 9.3 Summary of Specific Type of Technology Impact on Productivity and

Quality

% Improvement in total % Improvement in

Types of technology
productivity quality

Robotics devices 47 29
Computer-aided
53 21
devices
Group technology 68 31
Page 281

Table 9.4 Comparison Among Labor, Capital, and Technology Impacts on

Productivity

Factors

Experts Labor ( %) Capital (%) Technology (%)

Kendrick 10 18 72
Denison 10 20 62
Christenson,Cummings, and Jorgenson 14 42 44
Average 14 27 59

Source: Morrison, D.L., and K.E. McKee, 1978. Technology for improved
productivity. Manufacturing Productivity Frontiers, Vol. 2, No.6, June, pp. 1–6.

Some of the many reasons that technology has a tremendous impact are
as follows:

1. Provide or create ability to produce more in a shorter time cycle

2. Provide means to reduce quality errors
3. Provide a logical approach to assist human reasoning in
completing tasks
4. Provide the ability for consistency in processes and service when
applied
5. Provide ability for self-generating, uninterrupted work stations

Although such technologies as robotics, CAD/CAM, laser, and group

technology are highly recommended as productivity and quality
improvement tools, they must be justified properly using the methods
discussed in Chapter 2. The total cost of doing business must be taken
into account when assessing their impact on total productivity.


9.8 DESIGN IMPACT

Productivity and quality can be greatly influenced for better or worse by

the physical well-being of tools, technology, and work places.
Edosomwan (1986, p. 18) provided the following seven design rules that
can help emerging technologies and new work places.
Page 282

Rule 1. The individual is the center of design. Recognize the human

anatomic structure, and obtain anthropometric dimensions to get the task
to the individual.

Rule 2. Utilize the principles of kinesiology in the design. Avoid

incompatible movement design, and allow the free movement of joints
around joint axes.

Rule 3. Observe the individual’s physiological capacity; avoid static

postures and physiological responses as criteria for design, and avoid
stress concentration points.

Rule 4. Apply psychological principles to improve morale and increase

job satisfaction.

Rule 5. Recognize worker rights to the control of production of work

activity, and allow skills development.

Rule 6. Involve the users of technology-based systems in the design

phase.

Rule 7. Give technology-based systems the ability to advise, alert, or

warn users of potential events.

9.9 OTHER FACTORS THAT IMPROVE MORALE

Although, there are no easy approaches to improving morale, the

following actions can help in an on-going program to improve morale in
the workplace:

1. On-going and frequent departmental meetings to enhance

communication between employees and management.
2. On-going management of quality improvement sessions to resolve
business problems.
3. Timely recognition of achievements and job performance.
4. On-going development of employees’ talents, both managers and
 non-managers.
5. On-going management attention to problems in the workplace.
6. An on-going open door policy that enables employees and
management to communicate frequently concerning workplace
problems.
7. On-going interfunctional communication to resolve problems.
8. Emphasis on people management to resolve any issue that might
affect morale.
Page 283

REFERENCES

Bares, R. M., 1968. Motion and Time Study Design and Measurement of
Work, 6th Ed. John Wiley and Sons, New York.

Edosomwan, J. A., 1986a. Managing technology in the work place—a

challenge for industrial engineers. Industrial Engineering, February.

Edosomwan, J. A., 1986b. A methodology for assessing the impact of

robotics on total productivity in an assembly task. Proceedings of Annual
International Industrial Engineering Conference, Dallas, Texas, May.

Goodwin, H. F., 1968. Improvement must be managed. Journal of

Industrial Engineering, Vol. 19, No. 11, pp. 538–543.

Herzberg, F., B. Mansner, and D. B. Snyderman, 1959. The Motivation to

Work. John Wiley and Sons, New York.

Mali, P., 1972. Managing by Objectives. John Wiley and Sons, New York.

Maslow, A. 1943. A theory of human motivation. Psychological Review,

July, pp. 388–389.

McClelland, D. C., 1961. The Achieving Society. Van Nostrand,

Princeton, New Jersey.

McGregor, D., 1960. The Human Side of Enterprise. McGraw-Hill, New

York.

Morrison, D. L., and K E. McKee, 1978. Technology for improved

productivity. Manufacturing Productivity Frontier, Vol. 2, No. 6, June, pp.
1–6.

Mundel, E. M., 1970. Motion and Time Study Principles and Practice.
Prentice-Hall, Englewood Cliffs, New Jersey.

Munsterberg, H., 1913. Psychology and Industrial Efficiency. Ayer Co.

Publishers, Salem, New Hamphire.

Smith, A., 1776. The Wealth of Nations.

Taylor, F. W., 1911. Scientific Management. Harper and Brothers

Publishers, New York.

Vroom, V. H., 1964. Work and Motivation. John Wiley and Sons, New
York.

Walker, R. C., 1950. The problem of the repetitive job. Harvard Business
Review, Vol. 28, No. 3, pp. 54–58, May.
Page 284
Page 285
Chapter 10
Establishing and Managing a Productivity and Quality
Improvement Program

This chapter presents guidelines for setting up and managing productivity

and quality improvement programs in organizations. A strategy for
resolving productivity and quality problems is presented. A formalized
approach for overcoming common concerns is also offered. A checklist to
be used by organizations in self-assessment is provided.

10.1 KEY ELEMENTS NECESSARY FOR A SUCCESSFUL

PRODUCTIVITY AND QUALITY PROGRAM

Edosomwan (1986) discusses ten key elements required for successful

productivity and quality programs. The elements are presented in Figure
10.1. Each step will now be described.

10.1.1 Top Management Support

A successful productivity and quality improvement program requires the
strong commitment and involvement of top executives and senior
managers of the organization. Total commitment from top management
should be demonstrated through policies, practice, and support provided
to create a formalized organizational structure that is in charge of
productivity and
Page 286

Figure 10.1 Elements involved in promoting a successful productivity

and quality improvement program.

quality improvement programs. The commitment must state that no levels

of defect are acceptable. Emphasis should he placed on productivity
improvement through defect and error prevention programs. Inspecting
quality into the product or service should be discouraged. The
commitment should be to do it right the first time at the source of
production or service. Top management involvement requires the on-
going participation review of productivity and quality improvement
projects and productivity leadership to resolve controversy issues and to
allocate resources for productivity and quality improvement programs.
Page 287

10.1.2 Define Productivity and Quality Improvement Goals and

Objectives
At both the basic task level and the organizational level, there should be
a clear definition of productivity and quality improvement goals. This
provides the basis for dealing with complicated and deep-rooted
problems. Pareto principles should be used to classify goals and
problems when applicable. Each productivity and quality goal and
problem should be matched with implemented action on a real-time
basis. The projected benefits should be stated and monitored.

10.1.3 Worker Involvement

A participating management approach should be used to involve workers
at all levels. Everyone should be made to understand the meaning of
quality and productivity in the survival contest for profit The commitment
from both management and workers should be to do it right the first time
at the source of production or service. Teamwork should be encouraged.
A productivity and quality improvement team should include members
from each sector of the production or service process. The team should
meet regularly to resolve potential problems. Brainstorming techniques
should be encouraged at the team level. Workers should also be involved
in a goal-setting process; this will enable them to take ownership for the
productivity and quality issues.

10.1.4 Implement Information Base for Productivity and Quality

Management
A management information system should be implemented. Such a
system should incorporate a data base on productivity and quality trends,
issues of key accomplishments, and measurements and plans. The data
base of key processes, services, and procedures should made available
to analysts and team members working on the improvement of
productivity and quality.

10.1.5 Establish a Network of Effective Communication

At all levels of the organization, people should be made aware of
productivity and quality issues. Such communication can be done
through special
Page 288

reports on productivity and quality, bulletins, meetings set up to review

issues, departmental meetings, and management memoranda. It is also
important for the productivity coordinators and analysts to keep abreast
of the latest developments in the area through external journals,
conferences, and library research. The participative management
approach should be used at all levels. This will improve communication
up and down the organization.

10.1.6 Encourage Research Activity on Productivity and Quality

Improvement
Productivity and quality improvement result from both the ability to
generate new ideas and techniques and the ability to apply such new
ideas to improve current operations. An organization that provides both
financial and moral support for research activity is bound to be profitable.
The encouragement of research activity for the improvement of
productivity and quality also helps create a fertile climate for innovation of
new products, new services, and new techniques of management.

10.1.7 Provide Management and Employee Training for Improving

and Directing Productivity and Quality
Everyone in the organization should be made to understand the goals
and objectives of the productivity and quality improvement program. This
will facilitate commitment from everyone. At all levels, specific training
should be designed to educate people on productivity and quality
improvement concepts. A typical training package should include the
following: techniques for productivity and quality measurement, control
and evaluation, planning and analysis, improvement and monitoring, root-
cause analysis technique, design of experiments, project and task
management, and construction and interpretation of controls. The training
provided should require tools and awareness of the issue of quality and
productivity.

10.1.8 Link Improvement Program to Measurement and Planning

Aspects
A total productivity measurement system should be implemented at both
the task and the firm level. Such a system enables an organization to
relate
Page 289

partial productivities to total and to pinpoint specific areas for

improvement. Institute a statistical process control technique when
possible. Develop measurements for percentage defectives, rework, and
engineering changes, and measure the variability of the process on an on
going basis. The process control charts should be understandable by
everyone as a measure of process effectiveness. The cost of quality and
productivity improvements implemented should be calculated periodically.
Actions should be implemented to correct high failure rates and errors at
the source of production or service. Short-term and long-term planning
for zero defects and productivity gains should be developed.

10.1.9 Establish Mechanisms for Resolving Problems

In addition to encouraging teamwork at all levels, organization leadership
may elect to use experienced managers and technical personnel
consultants, and a task force to resolve productivity and quality issues.
The use of individual efforts, such as experienced technical personnel
within the organization, allows those most intimately familiar with the
current work processes to suggest and implement improvements. The
danger in using this approach is that people may not want improvement
in the processes within their realm of authority. It also may be difficult to
see improvement within a given process, given that participants have
been used to performing the same functions the same way for a long
period of time. Organizations that choose to use this approach must be
willing to share gains with their employees and managers on new ideas
about productivity and quality management.

The second alternative is to use the task force when applicable. The task
force approach has advantages, such as reduced training cost, uses the
most competent people, increases objectivity from members, and is often
comprised of members from all functions and sectors. The drawback to
this approach is that a commitment for follow-up on improvement projects
could be missing after the task force is dissolved. The way to avoid this is
to assign a specific department or person for full accountability of
improvement projects provided by the task force.

The third alternative is to use a consultant. This approach brings strong

technical proficiency if the consultant is selected properly. The consultant
often has neutral opinions about organization policies and has one key
mission, of doing the best job for fair pay. This approach often provides
honest, fresh ideas and does not require the internal training of workers.
Page 290

However, it might be pointed out that the end product obtained from a
consultant is only as good as the qualification and experience of the
consultant. Consultants are often resisted by insiders. A strong effort
must be made to seek his or her ideas for improvement. A major
drawback to using a consultant is that the burden of commitment and
accountability may remain hanging with the senior management of the
organization unless it is delegated quickly. The vast majority of consulting
firms are honest and reliable. To protect organizational assets against the
fraudulent few, the following should he done:

1. Request background information on the consulting firm and

leading experts.
2. Find out if there is charge for estimates before you request one.
3. Find out if there is a charge for proposals or a site visit before you
request one.
4. Beware of high-pressure improvement promises at low cost.
5. Deal with consulting firms that are well known or recommended by
peers or experts. Consult productivity and quality improvement
centers when in doubt.
6. Allow some internal employees to work with consultants to
facilitate easy implementation of new ideas and consultant
understanding of processes and procedures.
7. Beware of unusually low prices for services that seem too good to
be true; they probably are.
8. Ask for a detailed project schedule and implementation plan for
action.
9. Understand how estimates for resources can change and the
associated cost.
10. Ensure that the work done, improvement actions suggested
organizational charges, and other recommendations and follow-up
actions are provided.

10.1.10 Establish Mechanisms for Rewarding Gains from

Productivity and Quality Improvement
Ideas implemented for productivity and quality improvement should be
rewarded by management through several means, such as awards
recognition among peers, bonus pay, additional technical challenge, and
promotion. Management should ensure that compensation and promotion
should be related to good performance.
Page 291

10.2 ORGANIZATION FOR PRODUCTIVITY AND QUALITY

MANAGEMENT

In Chapter 1, the productivity and quality management hierarchy (PQMH)

was presented. At each level of the hierarchy, it is important to specify
the organization structure with the individuals responsible for the
improvement program. At the organizational level, the productivity and
quality improvement director, coordinators, and program managers are
usually selected to hold such activity. At the policy level, a productivity
steering committee is usually appointed to provide leadership for the
organization’s productivity and quality goals and objectives. At lower
levels, such as department or plant, a productivity council should also be
formed to promote improvement activities. A summary of the role and
responsibilities of the steering committee, coordinator, and council is
presented in Table 10.1.

A successful productivity and quality improvement program must have

designated responsibilities at various levels. In Chapter 1, the productivity
and quality management hierarchy presented shows the various levels of
emphasis. There has to be an organizational structure at the corporate,
division, plant or site, and functional levels. At the corporate level, the
vice president of productivity and quality management should be
appointed to oversee all the division programs. Additional responsibility at
this level includes project selection, review of budget allocation to division
programs, and corporate communications requirements for productivity
and quality management. This level should have a close link to research
and development, strategic planning, and business controls. The division
directors should be appointed to oversee plant or site productivity and
quality activities.

The role of the director is to ensure consistency and uniformity in the

various plant locations. At this level, emphasis is placed on applied
concepts, research, and techniques that improve productivity at the site
level. The task force representing all plants are usually put in place to
formulate overall productivity and quality improvement policies. The
various plants usually appoint their own program managers or
coordinators to act as a focal point on all key issues. The suggested
organizational structure for a corporate productivity and quality program
is presented in Figure 10.2. An organization may use their existing
industrial engineering departments or functions as a focal point for
coordinating productivity and quality improvement activities.
Page 292

Table 10.1 Productivity and Quality Improvement Organizations

Organization Responsibilities

Productivity 1. Provide, leadership in monitoring organization policy to ensure

steering that productivity and quality improvement goals and objectives
committee are met
2. Provide leadership for initiating new programs
3. Review all projects and determine approval
4. Review resource allocation requirement by project and

determine approval
Productivity 1. Evaluate productivity and quality improvement project at the
council plant or functional level
2. Coordinate key good practice overall
3. Disseminate improvement ideas
4. Monitor activities related to productivity and quality, and

recommend revision to policies where necessary
Productivity
1. Provide education and training
coordinators
2. Provide effective communication internally and externally
3. Key contact for all issues
4. Design and implement new ideas
5. Adviser to operating units (departments)
6. Monitor factors affecting productivity and quality, and

recommend corrective actions
7. Act as chair of the organization productivity and quality

council
8. Initiate and maintain effective productivity and quality

awareness programs

10.3 OVERCOMING PROBLEMS

Productivity and quality improvement must be promoted with enthusiasm
and confidence. Everyone within the organization must be convinced that
there is always a better way of improving the various tasks performed.
However, many problems will arise that will present obstacles to retard
the progress of the improvement program. The following common
problems are usually experienced when promoting a productivity and
quality improvement program.
Page 293

Figure 10.2 Suggested productivity and quality organizational structure

for a large company
Page 294

10.3.1 Unwillingness to Change Work Habit

After learning a given pattern to perform a specific task, the pattern
becomes a habit. It is often difficult to break away from the old habit and
accept a new one. In addition to educating people about what the new
productivity and quality improvement will bring to their tasks, people must
be made to understand both the tangible and intangible benefits of
changing from an old habit to a new one. A good strategy is to get
everyone involved in all phases of the projects and programs when
possible.

10.3.2 Resistance to Change

Anytime a new program or idea is promoted, people will accept or resist
change depending on how they are affected by the change. There are
four types of people one is likely to deal with when promoting productivity
and quality improvements. There are those people who will do everything
within their power to knock out the improvement because it creates an
extra burden for them. Such people always find several reasons that the
new improvement idea will not work. They always try to convince the
improvement analyzer to stay with the old method of doing things. There
are those people who do all the talking about how productivity and quality
should be improved and promoted but take very little action. There are
others who also spend their energy wishing someone else or some new
system will automatically do the work. And finally there are those people
with a keen interest in improving productivity and quality so that the
organization can stay profitable. Such people get under the load, do the
work, and provide all the support needed. The strategy is to be able to
get all the four categories of people convinced to a great extent. This can
be done through emphasis on teamwork and regular meetings to ensure
effective communication of the selected improvement programs. It is also
recommended that the cooperative efforts received be recognized among
peers and supervisors.

10.3.3 Lack of Proper Planning

A productivity and quality improvement program can easily be
unsuccessful if the requirements for start-up, key people, and total
implementation of activities are not planned properly. It is important that
the appropriate trained people with knowledge of productivity and quality
be made coordinators of improvement projects. Such coordinators must
specify in great detail the key
Page 295

activities needed for improvement projects, who is responsible, when

they will be completed, and the expected benefit date.

10.3.4 Fear of the Unknown

Because new productivity and quality improvement ideas may have some
uncertainty because of unproven results, most people are likely to be
afraid of failure. As a result, they may resist the implementation of new
concepts and ideas. All levels of management and employees must be
educated about the essentials and importance of willingness to risk
failure. If one new idea fails, it does not prevent another good one from
succeeding.

10.3.5 Lack of Appropriate Data Base

A productivity and quality improvement program should be based on an
adequate data base with correct historical information. It is every
important to involve all levels of management and employees during
improvement program start-ups to ensure that adequate data and a
description of processes and procedures are provided.

10.3.6 Resentment or Criticism

Most people believe that they perform their task in the most effective and
efficient manner and will resent criticism that proves otherwise. Criticism
from productivity analysts, coordinators, and consultants should be
offered constructively and positively to avoid backlash. On the other
hand, those receiving ideas must be willing to do away with a defensive
attitude. Everyone involved in the productivity and quality improvement
program must have an open mind and the willingness to accommodate
several different viewpoints.

10.3.7 Inadequate Sharing of Productivity and Quality Improvement

Gains
Productivity and quality gains obtained from improvement programs must
be distributed equitably and fairly to encourage a continued innovative
process for additional ideas. Most organizations have a formal
suggestion program, cost effectiveness program, bonus program, and
awards program that are specifically designed to reward contributions to
productivity and quality improvement. It is important to recognize that
money is not the
Page 296

only source of motivation. Peer and superior recognition, promotions,

additional challenges, job content, and others are also key sources of
motivation.

10.3.8 Conflicting Compromise of Objectives

Productivity and quality improvement go together. Both managers and
employees must stay away from the notion that if productivity improves,
quality will suffer. The typical notion of push schedules when they are
needed and push quality when it is wanted should basically be
eliminated. Programs selected for improvements must satisfy dual
objectives. People must be trained in how to manage conflicting
objectives.

10.3.9 Complacency Resulting from Current Status

There is a tendency for those organizations that are already leaders in
their respective industrial sector to feel so satisfied with their performance
as leaders that they completely ignore the ongoing assessment of the
method of operation and recommendations for implementable changes.
Everyone within the organization must be trained to recognize that there
is no limit to success through improvement. The more improvement ideas
are implemented, the better off the organization will be financially.

10.3.10 Starting off Too Big

Productivity and quality improvement issues can get complicated. The
entire organization’s problem cannot be resolved overnight. For
improvement programs to be successful, They must be started with
reasonable projects that the available resources can handle. Once the
results and benefits of such projects have been obtained, bigger ventures
can be considered.

10.3.11 Overall Strategy for Overcoming Common Problems

The following twelve points are recommended when promoting a
productivity and quality improvement program:

1. Obtain the support of the total organization (management and

employees).
Page 297

1. Set realistic and opportunistic goals and objectives for productivity

and quality improvement.
2. Plan program activities ahead of time.
3. Maintain internal and external contacts with key people who have
the expertise to help and train workforce members in new
techniques for productivity and quality improvement.
4. Establish a clear review process for concern and accomplishments
that may arise.
5. Re-evaluate the program periodically, and make modifications
when necessary.
6. Be flexible and willing to sacrifice time and other resources to
obtain improvement.
7. Follow up continuously to resolve open issues.
8. Do not expect too great a productivity and quality improvement
overnight.
9. Use expert opinions and advice when needed.
10. Obtain adequate staffing to complete the improvement program
objectives.
11. Do not expect too great an immediate return on investment. Some
improvement projects may have key benefits because they
provide continuous growth in the long run.

10.4 CHECKLIST FOR PRODUCTIVITY AND QUALITY

MANAGEMENT

It is often very easy to overlook issues or problems within the business

process that are likely to contribute to overall productivity and quality
improvement. It is also likely that overlooked problems may cause
additional problems or have a negative impact on productivity and quality.
This section focuses on providing a detailed checklist that will enable
organizations to understand where problems are likely to occur. Some of
the questions on the checklist (Table 10.2) may apply at the operational
level; others may be useful at the management policy level. It is
recommended that a key action plan be developed for areas of
weaknesses. A specific task should be assigned to a specific function or
person(s) with a target date for completion.
Page 298

Table 10.2 Checklist for Productivity and Quality Management

Is question
applicable?

Benefit
Self-assessment question for Action planTarget date
date
organization or task yes no to resolve for
for
weaknesses completion
actions

1. Does the organization have a

formal productivity and quality
management program?
2. How is the productivity and
quality management organized?
Is it effective?
3. Does everyone within the
organization have awareness of
the emphasis on productivity
and quality improvement?
4. How is the productivity and
quality management program at
all levels?
5. What educational programs are
available to train employees
and managers on the subject of
productivity and quality?
6. How effective are the training
programs?
7. Does the productivity and
quality management have the
 support of senior executives?
8. What are the avenues for
implementing suggestions that
affect productivity and quality?
9. Do employees receive rewards
for suggestions that improve
productivity and quality?
Page 299

Table 10.2 (continued)

Is question
applicable?

Benefit
Self-assessment question for Action planTarget date
date
organization or task yes no to resolve for
for
weaknesses completion
actions

1. Are employees and managers

paid for performance with
consideration of overall
improvement in technical and
people productivity and
quality?
2. Does the organization have a
comprehensive productivity
and quality planning program?
3. What are the strengths an
weaknesses of the
organization?
4. What are the opportunities and
threats facing the organization?
5. What are the plan’s central
assumptions?
6. What is the planning horizon
(2, 5 or 10 years)?
7. What key risks does the
organization face?
8. What is the probability of
 occurrence for each risk?
9. What is the impact of each risk
on resources and net economy?
10. What are the strategies to
capitalize on the strengths and
opportunities?
11. What are the key objectives for
the future?
Page 300

Table 10.2 (continued)

Is question
applicable?

Benefit
Self-assessment question for Action planTarget date
date
organization or task yes no to resolve for
for
weaknesses completion
actions

1. What planning awareness

programs are in place?
2. What are the mechanisms for
resource allocation?
3. What are the mechanisms for
plan evaluation?
4. What are the mechanisms for
plan maintenance?
5. In what data base will the plan
issues be tracked and
maintained?
6. What department, function,
group of people, or individual
is responsible for which
planning task?

7. What is the source of
forecasted input variables?
8. Who does the forecast and with
what method?
9. What is the organization’s
understanding of the economic
 trend?
10. What is the organization’s
understanding of legal or
governmental influence?
Geographical conditions?
Social conditions?
11. What is the strategy for market
analysis and competition?
Distribution channels?
Page 301

Table 10.2 (continued)

Is question
applicable?

Benefit
Self-assessment question for Action planTarget date
date
organization or task yes no to resolve for
for
weaknesses completion
actions

1. What are the communication

flow patterns supporting the
plans?
2. What are the technology and
production processes
supporting the plan?
3. What are other input variables
supporting the plan (energy,
capital, materials, labor,
research and development)?
4. What are the mechanisms for
scheduling activities?
5. What are the mechanisms for
programming activities?
6. What are the mechanisms for
budgeting and controlling?
7. What are implementation
priorities based upon?
8. What types of measures are in
place to measure productivity
and quality?
 9. What are the improvement
strategies and techniques for
productivity and quality?
10. How much research and
development activity is there
for productivity breakthroughs?
11. Are the organizational
structures balanced?
Page 302

Table 10.2 (continued)

Is question
applicable?

Self-assessment question for Action plan Target date Benefit

organization or task yes no to resolve for date for
weaknesses completionactions

1. Is the work force

motivated to improve
productivity and quality?
2. Are mechanisms in place
to eliminate job
bottlenecks?
3. Are too many design
changes complicating the
tasks?
4. Are there too many
inspection gates that delay
the work flow?
5. Is there a particular task
that delays the entire flow
of work?
6. Is the teamwork concept
practiced in resolving
problems?
7. Are there too many
procedures to follow?
8. Are there too many ‘‘nice
to have” but not “needed”
 functions?
9. Does the organization
encourage healthy
competition?
10. Does the organization give
incentives for technical
innovations?
11. Are productivity and
quality measures centered
on only one area?
12. Are there techniques for
indirect efforts toward
productivity control?
13. Are there techniques for
assessing quality in the
business process?
Page 303

Table 10.2 (continued)

Is question
applicable?

Self-assessment question for Action plan Target date Benefit

organization or task yes no to resolve for date for
weaknesses completionactions

1. Is the work place design

comfortable?
2. Are tools designed properly
for use by humans?
3. Does the work place allow
the smooth flow of work
from one task to another?
4. Are there safety hazards that
impact on performance?
5. Is there too much paperwork
within the process?
6. Are scrap costs too high?
7. Are there too many non-
value-adding operations?
8. Does an employee handle
the product more than once?
9. Does the operator
experience idle time?
10. Are the methods for
materials handling
adequate?
11. Are products and materials
 handled properly?
12. Is the percentage of rejected
work too high?
13. Are defects coming from the
supplier or vendor?
14. Is the process inducing
defects?
15. Are there too many rework
loops?
Page 304

Table 10.2 (continued)

Is question
applicable?

Benefit
Self-assessment question for Action planTarget date
date
organization or task yes no to resolve for
for
weaknesses completion
actions

1. Are the packaging materials

adequate?
2. Are employees matched with
jobs for which they are best
suited?
3. Do the priorities for resources
allocation follow the priorities
of productivity and quality
objectives?
4. Are there enough
communication sessions to
discuss productivity and quality
issues? Are there too many
meetings, or too few?
5. Are there mechanisms for
balancing the work load among
employees, departments, and
functions?
6. Are quality reports up-to-date?
7. Do you have excessive
overtime? Excessive
 absenteeism?
8. Is the turnover rate of the work
force high?
9. Are there mechanisms for
setting realistic standards and
specifications?
10. Does every employee
understand the cost of waste?
11. Are tools and equipment
maintained properly?
Page 305

Table 10.2 (continued)

Is question
applicable?

Benefit
Self-assessment question for Action plan Target date
date
organization or task yes no to resolve for
for
weaknesses completion
actions

1. Do you have scheduled

preventive maintenance?
2. Is equipment availability time
enough?
3. Is equipment utilization time
enough?
4. Do you have employees who
affect the productivity and
quality of others through bad
attitude?
5. Do you have a mechanism for
prioritizing jobs and
assignments?
6. Does management care about
people’s morale?
7. Are people well paid for their
performance?
8. Do you have a difficult task
that requires additional
training, additional
compensation?
 9. Do you have a job rotation
plan to cross-train everyone?
10. Is your work force stable?
11. Are you hiring the right skill
mix for jobs?
12. Do you give awards for
productivity and quality
improvements?
13. Do employees have adequate
breaks, lunch, etc.?
Page 306

Table 10.2 (continued)

Is question
applicable?

Benefit
Self-assessment question for Action planTarget date
date
organization or task yes no to resolve for
for
weaknesses completion
actions

1. Are employees given

allowance for task fatigue?
2. Do employees have adequate
development plans?
3. Do employees have adequate
performance plans?
4. Is there equity in salary
administration among
employees?
5. Is there a system for resolving
grievances?
6. Is there too little work
specialization?
7. Is there excessive work
specialization?
8. Are the same production or
service problems recurring?
9. Are there mechanisms in place
to track ownership to
problems?
10. Are improvements monitored
 regularly and reinforced?
11. How is the executive time
spent? On operational
problem? On strategic
problems? On new businesses?
12. Are there management
interferences across functions?
13. Is there proper cross-
communication across
functions?
14. Does everyone understand the
organizational
Page 307

Table 10.2 (continued)

Is question
applicable?

Benefit
Self-assessment question for Action planTarget date
date
organization or task yes no to resolve for
for
weaknesses completion
actions

1. mission? Departmental
mission? Goals and objectives?

1. Are there production and

service inconsistencies across
different locations?
2. Are the tasks too repetitious for
employees?
3. Do employees have basic
controls over what they can do?
4. Are some employees
performing tasks below the
level of the skill for which they
are being paid?
5. Is technical creativity used
properly?
6. Are all the policies, procedures,
and assignments top down?
7. Is each activity and work
element as specified worth
doing?
 8. Does communication of work
flow in the most simple, direct,
and logical manner?
9. Are there too many
interruptions to the production
or service caused by unplanned
customer demand?
10. Are there too many extra
services requested by the
customer?
11. Does the organization have
early manufactur-
Page 308

Table 10.2 (continued)

Is question
applicable?

Benefit
Self-assessment question for Action plan Target date
date
organization or task yes no to resolve for
for
weaknesses completion
actions

1. ing involvement in design

phase?

1. Is most time spent on important

assignments or miscellaneous
work?
2. Is the quality standard for
product and service too high?
3. Are sampling inspections
utilized in place of 100%
inspection?
4. Is work checked too many
times at different processes and
gates?
5. Would quality errors be caught
elsewhere if the present checks
were eliminated?
6. What would happen if the
quality errors were not timely
found?
7. Are there cross-motions among
 people due to inadequate
layout?
8. Do documents flow smoothly
from desk to desk?
9. Can a computer be used to
replace manual tracking
efforts?
10. Do individuals receiving
memos, forms, and documents
need them? Do they make use
of them?
11. What information is really
necessary and useful to manage
the task? The department’s
Page 309

Table 10.2 (continued)

Is question
applicable?

Benefit
Self-assessment question for Action planTarget date
date
organization or task yes no to resolve for
for
weaknesses completion
actions

1. requirements? Business
required?

1. Is the cost of data processing

too high?
2. Is the cost of materials too
high? Can another vendor do
the job?
3. Is the cost of capital too high?
Is an alternative financing
method available?
4. Is the cost of energy too high?
What happens if solar energy is
used? Oil? Gas? Water?
5. Is the right equipment available
when it is needed?
6. Can the organization afford a
group technology concept?
7. Does the organization have an
adequate span of control?
8. How much emphasis is placed
 on a management development
program? Do managers
practice a participative
management approach?
9. Are auditors used to evaluate
processes and services?
10. Are consultants used for new
ideas?
11. Are task forces used to resolve
cross-functional problems?
Page 310

Table 10.2 (continued)

Is question
applicable?

Benefit
Self-assessment question for Action planTarget date
date
organization or task yes no to resolve for
for
weaknesses completion
actions

1. Are there measures for

management and employee
loyalty to the organization?
2. Are there groups of employees
working against organization
tradition? Philosophy? Goals
and objectives?
3. Is there a balance between the
existing system for employee
reward and punishment?
4. How are policy decisions
formulated?
5. Does the organization have an
adequate executive
development program?
6. Are there executive talents that

are wasted?
7. What are the strategies for
strong competition?
8. What are the strategies for
diversification of product and
 services?
9. Is the marketing strategy
adequate for the various
product line and services
offered?
10. Do the organizational goals
support long-term investment?
11. How much is invested for
future growth?
12. Are there mechanisms in place
to encourage
Page 311

Table 10.2 (continued)

Is question
applicable?

Self-assessment question for Action plan Target date Benefit

organization or task yes no to resolve for date for
weaknesses completionactions

1. technological innovation?

1. What are the productivity

and quality techniques
needed as technology
changes.?
2. Are there plans in place to
manage a shorter cycle of
technology?
3. What is the organization’s
response to productivity and
quality problems?
Page 312

REFERENCES

Edosomwan, J. A., 1986a. A methodology for assessing the impact of

robotics on total productivity in an assembly task. Proceedings of Annual
International Industrial Engineering Conference, Dallas, Texas, May.

Edosomwan, J. A., 1986b. Productivity management in computer-aided

manufacturing environment. Proceedings of First International
Conference on Engineering Management, September 22–24,
Washington, D.C.

Edosomwan, J. A., 1987. The meaning and management of productivity

and quality. Industrial Engineering, January.
Page 313
Chapter 11
Consumer Satisfaction: A Drive for Quality and
Productivity Improvement

A customer-oriented revolution is taking place in the world economy. The

buying power and rationale of current customers cut across nationalism
and protectionism of common values and cultures. Providers of products
and services are learning hard lessons through increased competition
that customers play a key role in determining the survival, profitability and
growth of any organization.

While there is increased awareness and need for modern organizations

to become customer driven, many still do not understand the
fundamental elements of a customer-driven organization. Although
traditional organizations still exist in large numbers today, customer-
driven organizations will be the winners in the decades ahead. Now,
customers must get what they want, when they want it, how they want it,
at the right price, at the right time, with the highest quality, and providing
the right competitive solutions that address and satisfy the needs of the
customer.

In addition to focusing on the twelve elements presented in Table 11.1,

customer-driven organizations must embark on continuous improvement
in the product and service design stage, product and service delivery
stage, and customer relations management stage.
Page 314

Table 11.1 Traditional Vs. Customer-Driven Organization

Customer-Driven
Traditional Organizations
Organizations
• Long-term focus
Product and • Short-term focus • Prevention-based
Service • Reactionary management management
Planning • Management by objectives • Customer-driven strategic
planning process
• Bottom-line financial results
• Market share
Measures of • Customer satisfaction
• Long-term profitability
Performance • Quick returns on investment
• Quality orientation
• Total productivity
• Customers are irrational and a • Voice of the customer is
Attitudes
pain important
Toward
• Customers are a bottleneck to • Professional treatment and
Customers
profitability attention to customers
• Provided according to
Quality of • Provided according to
customer requirements and
Products organizational requirements
needs
• Increase market share and
Marketing • Seller’s market
financial growth through
Focus • Careless about lost customer
customer satisfaction
Process
• Focus on detection of errors • Focus on error and defect
Management
and defects prevention
Approach
Product and
Service • It is OK for customers to wait • Provide fast-time-to-market
Delivery for products and services products and services
Attitude
• People are the source of
People • People are an organization’s
problems and are burdens on the
Orientation greatest resource
organization
Basis for • Customer-driven
Decision- • Product-driven • Management by data and
Making • Management by opinion facts
Attitudes • Courtesy, responsiveness,
• Hostile and careless
Toward empathy, and respect for
• ‘‘Take it or leave it” attitude
Customers customers
• Crisis management • Continuous process
Improvement
• Management by fear and improvement
Strategy
intimidation • Total process management
• Career-driven and independent
• Management-supported
work
Mode of improvement
• Customers, suppliers, and
Operation • Teamwork between suppliers,
process process owners have
owners,and customers
nothing in common
Page 315

11.1 PRODUCT AND SERVICE DESIGN

If the quality of products and services is to be defined with input from the
customer, the needs and expectations of the customer must be
incorporated early in the design stage. This requires the organization to
remain close to the customer. Closeness to the customer means knowing
the customer’s business, products, services and the expected solutions
to operational problems.

At this stage, emphasis should be placed on using the best available

knowledge, tools, techniques, and technology to satisfy the customer
requirements. The needs of the customer should be evaluated through
product prototype or pilot service offerings. Process design must also be
reviewed and improved to address the specifications, standards, required
procedures and methods to provide the products and services to satisfy
customers.

11.2 PRODUCT AND SERVICE DELIVERY

At this stage, organizations should implement process control

mechanisms, tools and technologies to monitor the variability in the
production or services process. Quantitative and qualitative problem
solving approaches are recommended for understanding the root causes
of problems and implementing corrective actions.

The focus should be on error and defect prevention. Everyone within the
organization should be encouraged to focus on on-going process
measurement, evaluation, control and organized use of common sense,
tools, techniques and methodologies to improve work processes.

11.3 CUSTOMER RELATIONS AND MANAGEMENT

Closeness to the customer requires more than a telephone call or

periodic mail survey. A good customer relations management program
emphasizes continuous problem resolution at the source, customer
complaints resolution through defect and error prevention, customer
feedback mechanisms to improve product and service offerings and one-
on-one contact with the customer to verify how well needs are met.
Partnership with the customer can be enhanced through:

On-line communication channels between product and service process-

owners and the customer.
Page 316

Periodic interviews and surveys conducted to access the degree of

customer satisfaction.

Continuous customer participation in new service strategies.

Feedback mechanism to customers on improvement achieved in the

production, delivery and consumption process.

Encouragement of the suppliers, process owners and customers to work

as a team in resolving production and service requirements and
problems.

In order to accomplish the goal of being customer-driven, organizations

must adopt five basic principles:

1. Quality, productivity and performance improvement must be led by

management;
2. Continuous quality improvement, customer first philosophy and
people job satisfaction must be company wide;
3. Adopt the philosophy that everyone is responsible for quality and
total customer satisfaction;
4. Profitability achieved through total customer satisfaction, defect
and error prevention and an organization-wide attitude of doing
things right the first time at the source of production and service;
5. Success through continuous improvement of work processes,
technologies, systems, methods, procedures, management
practices and heavy emphasis of education and training of the
workforce.

Winning organizations begin and achieve the quest for success by

delighting the customers. A customer-driven organization utilizes input
from its customers, adopts a philosophy of continuous improvement, and
creates a total quality culture that embraces the twelve focus elements
presented in this article.
Page 317
Chapter 12
Conclusion

This book was written with a consideration of productivity and quality

management as essential dimensions in an organization’s effectiveness.
It is important to note that productivity and quality are connected and
interrelated. The goal-setting process, operations improvement,
performance measurement, and other strategies geared toward
organization improvement must be done with the understanding that
productivity and quality are positively correlated. It is impossible to have
one without the other. A sound productivity and quality management
program can provide the basis for organizations to effectively address
such issues as

Waste elimination within the organization

Elimination of process and procedural bottlenecks
Cost reduction
Defect reduction
Rapidly changing technology with increased sophistication and
specialization
Rate of growth of diversified product lines and services
Other organizational complexities

In order for productivity and quality management efforts to continue to

yield positive improvement and results, everyone within the organization
must be willing to encourage teamwork. There must be cross fertilization
Page 318

of ideas among people and across departments and functional areas.

Everyone involved in the productivity and quality program must have the
determination to improve the work organization effectively and efficiently.
There must be strong awareness that competition can create a wide gap
between two similar tasks, processes, firms, and profit levels obtained by
similar organizations. Today, most companies in the United States and
other countries worldwide are aware of the productivity and quality
advantage enjoyed by Japanese companies. This is true in the
electronics industry and automobile industry, and other areas as well. If
the right things are going to be done regarding productivity and quality
improvement, organizations must constantly train and retrain talents to
provide the technical vitality needed to deal with pressing issues.
Everyone within the organization must also believe that change is
possible, change can bring prosperity, and change that brings
improvement in organization should be welcome without caution and
bottlenecks. Acceptance of changing values and challenges must also be
done in conjunction with acceptance and implementation of new ideas,
suggestions, and techniques.

Productivity and quality management is both a top-down and a bottom-up

continuous process. Top-down because senior management and
executives must determine the right productivity and quality goals and
objectives of each major entity within the organization. Management can
set the operating climate, operating guidelines, and resource allocation
that determine the successful implementation of productivity and quality
improvement projects. Management can reject or take recommendations
from subordinates in a manner that has a positive or negative impact on
productivity and quality. In addition, top management establishes
priorities for productivity and quality improvement projects based on the
resources available. Productivity and quality management can be viewed
as bottom-up because each employee responsible for each task or set of
activities has the opportunity to evaluate their own mode of operations,
eliminate the waste from such operations, design and develop better
habits and methods of doing their own work, and implement actions on
an ongoing basis to achieve improvements. It is important to realize that
the skills requirements for productivity and quality improvement are not
difficult to learn. The problem lies more with the continuous interference
caused by old habits. Anyone willing to accept productivity and quality
improvement challenges must be willing to break away from the old habit
of doing things if it does not work well. One has to be willing to have an
open mind for new ideas and to support their implementation. If everyone
Page 319

within the organization provides his or her support in implementing

improvement ideas, the battle against inflation, high cost, and a poor
quality product is won. It is also important to bring reality into the picture
in business operations. Every productivity and quality issue is unique; no
one skill or action is appropriate for all purposes. Management and
employees should be trained to recognize the various basic distinctions
to ensure progress in all given situations and in each area of the
business.

The actions implemented to address productivity and quality issues and

problems must be positive, consistent, and workable. In addition,
management and employees must pay attention to business, technical,
and people-oriented concerns on an on-going basis. Clearly, success is
dependent upon the employees’ and managers’ belief in themselves,
what they do, and how it is done. The success is also based on both the
action plans and how they are applied. Measurement of productivity and
quality improvement actions are necessary to see if expected results
have been obtained. The locus of control must focus attention on on-
going continuous improvement and follow-up on open issues.

The book has provided significant tools, techniques, concepts, and ideas
on how to improve productivity and quality in a highly competitive
environment. The framework presented covers all aspects of business
operations. Perhaps the material provided has a broader use and
applicability because it has been validated in real-life situations. I hope
that the discussion throughout the book provides the understanding that
productivity and quality are connected and require an on-going process
of continuous elimination of waste through the application of common
sense. Productivity and quality improvement does not mean that people
should work harder, but work smarter with better tools, techniques,
processes, resources, and implementation of new ideas.
Page 320
Page 321

APPENDICES
Page 322

Appendix A
Statistical Tables

Standard Normal Distribution

F-Distribution Table, α = 0.5
F-Distribution Table, α = 0.1
t-Distribution Table

Adapted from Process Control, Capability and Improvement. The IBM

Quality Institute Publication, Southbury, Connecticut, May 1985.
Reprinted with permission.
Page 323

Standard Normal Distribution

(Area Under Normal Curve)

a = the proportion of
process output beyond a
particular value of
interest (such as a
specification limit) that
is z standard deviation
units away from the
process average (for a
process that is in
statistical control and is
normally distributed).
For example, if z = 2.17,
a = .0150 or 1.5%. In
any actual situation, this
proportion is only
approximate.

|z| x.x0 x.x1 x.x2 x.x3 x.x4 x.x5 x.x6 x.x7 x.x8 x.x9

4.0 .00003

3.9 .00005 .00005 .00004.00004.00004 .00004.00004.00004.00003.00003

3.8 .00007 .00007 .00007.00006.00006 .00006.00006.00005.00005.00005
3.7 .00011 .00010 .00010.00010.00009 .00009.00008.00008.00008.00008
3.6 .00016 .00015 .00015.00014.00014 .00013.00013.00012.00012.00011
3.5 .00023 .00022 .00022.00021.00020 .00019.00019.00018.00017.00017

3.4 .00034 .00032 .00031.00030.00029 .00028.00027.00026.00025.00024

3.3 .00048 .00047 .00045.00043.00042 .00040.00039.00038.00036.00035
3.2 .00069 .00066 .00064.00062.00060 .00058.00056.00054.00052.00050
3.1 .00097 .00094 .00090.00087.00084 .00082.00079.00076.00074.00071
3.0 .00135 .00131 .00126.00122.00118 .00114.00111.00107.00104.00100

2.9 .0019 .0018 .0018 .0017 .0016 .0016 .0015 .0015 .0014 .0014
2.8 .0026 .0025 .0024 .0023 .0023 .0022 .0021 .0021 .0020 .0019
2.7 .0035 .0034 .0033 .0032 .0031 .0030 .0029 .0028 .0027 .0026
2.6 .0047 .0045 .0044 .0043 .0041 .0040 .0039 .0038 .0037 .0036
2.5 .0062 .0060 .0059 .0057 .0055 .0054 .0052 .0051 .0049 .0048

2.4 .0082 .0080 .0078 .0075 .0073 .0071 .0069 .0068 .0066 .0064
2.3 .0107 .0104 .0102 .0099 .0096 .0094 .0091 .0089 .0087 .0084
2.2 .0139 .0136 .0132 .0129 .0125 .0122 .0119 .0116 .0113 .0110
2.1 .0179 .0174 .0170 .0166 .0162 .0158 .0154 .0150 .0146 .0143
2.0 .0228 .0222 .0217 .0212 .0207 .0202 .0197 .0192 .0188 .0183

1.9 .0287 .0281 .0274 .0268 .0262 .0256 .0250 .0244 .0239 .0233
1.8 .0359 .0351 .0344 .0336 .0329 .0322 .0314 .0307 .0301 .0294
1.7 .0446 .0436 .0427 .0418 .0409 .0401 .0392 .0384 .0375 .0367
1.6 .0548 .0537 .0526 .0516 .0505 .0495 .0485 .0475 .0465 .0455
1.5 .0668 .0655 .0643 .0630 .0618 .0606 .0594 .0582 .0571 .0559

1.4 .0808 .0793 .0778 .0764 .0749 .0735 .0721 .0708 .0694 .0681
1.3 .0968 .0951 .0934 .0918 .0901 .0885 .0869 .0853 .0838 .0823
1.2 .1151 .1131 .1112 .1093 .1075 .1056 .1038 .1020 .1003 .0985
1.1 .1357 .1335 .1314 .1292 .1271 .1251 .1230 .1210 .1190 .1170
1.0 .1587 .1562 .1539 .1515 .1492 .1469 .1446 .1423 .1401 .1379

0.9 .1841 .1814 .1788 .1762 .1736 .1711 .1685 .1660 .1635 .1611
0.8 .2119 .2090 .2061 .2033 .2005 .1977 .1949 .1922 .1894 .1867
0.7 .2420 .2389 .2358 .2327 .2297 .2266 .2236 .2206 .2177 .2148
0.6 .2743 .2709 .2676 .2643 .2611 .2578 .2546 .2514 .2483 .2451
0.5 .3085 .3050 .3015 .2981 .2946 .2912 .2877 .2843 .2810 .2776

0.4 .3446 .3409 .3372 .3336 .3300 .3264 .3228 .3192 .3156 .3121
0.3 .3821 .3783 .3745 .3707 .3669 .3632 .3594 .3557 .3520 .3483
0.2 .4207 .4168 .4129 .4090 .4052 .4013 .3974 .3936 .3897 .3859
0.1 .4602 .4562 .4522 .4483 .4443 .4404 .4364 .4325 .4286 .4247
0.0 .5000 .4960 .4920 .4880 .4840 .4801 .4761 .4721 .4681 .4641
Page 324
Page 325

F-Distribution Table, α = 0.5

d.f. I (numerator)
d.f.2
(denominator
1 2 3 4 5 6 7 8 9 10 12 15 20 24

1 161 200 216 225 230 234 237 239 241 242 244 246 248 249
2 18.5 19.0 19.2 19.2 19.3 19.3 19.4 19.4 19.4 19.4 19.4 19.4 19.4 19.5
3 10.1 9.55 9.28 9.12 9.01 8.94 8.89 8.85 8.81 8.79 8.74 8.70 8.66 8.64
4 7.71 6.94 6.59 6.39 6.26 6.16 6.09 6.04 6.00 5.96 5.91 5.86 5.80 5.77
5 6.61 5.79 5.41 5.19 5.05 4.95 4.88 4.82 4.77 4.74 4.68 4.62 4.56 4.53

6 5.99 5.14 4.76 4.53 4.39 4.28 4.21 4.15 4.10 4.06 4.00 3.94 3.87 3.84
7 5.59 4.74 4.35 4.12 3.97 3.87 3.79 3.73 3.68 3.64 3.57 3.51 3.44 3.41
8 5.32 4.46 4.07 3.84 3.69 3.58 3.50 3.44 3.39 3.35 3.28 3.22 3.15 3.12
9 5.12 4.26 3.86 3.63 3.48 3.37 3.29 3.23 3.18 3.14 3.07 3.01 2.94 2.90
10 4.96 4.10 3.71 3.48 3.33 3.22 3.14 3.07 3.02 2.98 2.91 2.85 2.77 2.74

11 4.84 3.98 3.59 3.36 3.20 3.09 3.01 2.95 2.90 2.85 2.79 2.72 2.65 2.61
12 4.75 3.89 3.49 3.26 3.11 3.00 2.91 2.85 2.80 2.75 2.69 2.62 2.54 2.51
13 4.67 3.81 3.41 3.18 3.03 2.92 2.83 2.77 2.71 2.67 2.60 2.53 2.46 2.42
14 4.60 3.74 3.34 3.11 2.96 2.85 2.76 2.70 2.65 2.60 2.53 2.46 2.39 2.35
15 4.54 3.68 3.29 3.06 2.90 2.79 2.71 2.64 2.59 2.54 2.48 2.40 2.33 2.29

16 4.49 3.63 3.24 3.01 2.85 2.74 2.66 2.59 2.54 2.49 2.42 2.35 2.28 2.24
17 4.45 3.59 3.20 2.96 2.81 2.70 2.61 2.55 2.49 2.45 2.38 2.31 2.23 2.19
 18 4.41 3.55 3.16 2.93 2.77 2.66 2.58 2.51 2.46 2.41 2.34 2.27 2.19 2.15
19 4.38 3.52 3.13 2.90 2.74 2.63 2.54 2.48 2.42 2.38 2.31 2.23 2.16 2.11
20 4.35 3.49 3.10 2.87 2.71 2.60 2.51 2.45 2.39 2.35 2.28 2.20 2.12 2.08

21 4.32 3.47 3.07 2.84 2.68 2.57 2.49 2.42 2.37 2.32 2.25 2.18 2.10 2.05
22 4.30 3.44 3.05 2.82 2.66 2.55 2.46 2.40 2.34 2.30 2.23 2.15 2.07 2.03
23 4.28 3.42 3.03 2.80 2.64 2.53 2.44 2.37 2.32 2.27 2.20 2.13 2.05 2.01
24 4.26 3.40 3.01 2.78 2.62 2.51 2.42 2.36 2.30 2.25 2.18 2.11 2.03 1.98
25 4.24 3.39 2.99 2.76 2.60 2.49 2.40 2.34 2.28 2.24 2.16 2.09 2.01 1.96

30 4.17 3.32 2.92 2.69 2.53 2.42 2.33 2.27 2.21 2.16 2.09 2.01 1.93 1.89
40 4.08 3.23 2.84 2.61 2.45 2.34 2.25 2.18 2.12 2.08 2.00 1.92 1.84 1.79
60 4.00 3.15 2.76 2.53 2.37 2.25 2.17 2.10 2.04 1.99 1.92 1.84 1.75 1.70
120 3.92 3.07 2.68 2.45 2.29 2.18 2.09 2.02 1.96 1.91 1.83 1.75 1.66 1.61
∞ 3.84 3.00 2.60 2.37 2.21 2.10 2.01 1.94 1.88 1.83 1.75 1.67 1.57 1.52
Page 326
Page 327

F-Distribution Table, α = .01

d.f. I (numerator)
d.f.2
(denominator)
1 2 3 4 5 6 7 8 9 10 12 15

1 4,0525,0005,4035,6255,7645,8595,9285,9826,0236,0566,1066,157
2 98.5 99.0 99.2 99.2 99.3 99.3 99.4 99.4 99.4 99.4 99.4 99.4
3 34.1 30.8 29.5 28.7 28.2 27.9 27.7 27.5 27.3 27.2 27.1 26.9
4 21.2 18.0 16.7 16.0 15.5 15.2 15.0 14.8 14.7 14.5 14.4 14.2
5 16.3 13.3 12.1 11.4 11.0 10.7 10.5 10.3 10.2 10.1 9.89 9.72

6 13.7 10.9 9.78 9.15 8.75 8.47 8.26 8.10 7.98 7.87 7.72 7.56
7 12.2 9.55 8.45 7.85 7.46 7.19 6.99 6.84 6.72 6.62 6.47 6.31
8 11.3 8.65 7.59 7.01 6.63 6.37 6.18 6.03 5.91 5.81 5.67 5.52
9 10.6 8.02 6.99 6.42 6.06 5.80 5.61 5.47 5.35 5.26 5.11 4.96
10 10.0 7.56 6.55 5.99 5.64 5.39 5.20 5.06 4.94 4.85 4.71 4.56

I 9.65 7.21 6.22 5.67 5.32 5.07 4.89 4.74 4.63 4.54 4.40 4.25
12 9.33 6.93 5.95 5.41 5.06 4.82 4.64 4.50 4.39 4.30 4.16 4.01
13 9.07 6.70 5.74 5.21 4.86 4.62 4.44 4.30 4.19 4.10 3.96 3.82
14 8.86 6.51 5.56 5.04 4.70 4.46 4.28 4.14 4.03 3.94 3.80 3.66
15 8.68 6.36 5.42 4.89 4.56 4.32 4.14 4.00 3.89 3.80 3.67 3.52

16 8.53 6.23 5.29 4.77 4.44 4.20 4.03 3.89 3.78 3.69 3.55 3.41
17 8.40 6.11 5.19 4.67 4.34 4.10 3.93 3.79 3.68 3.59 3.46 3.31
18 8.29 6.01 5.09 4.58 4.25 4.01 3.84 3.71 3.60 3.51 3.37 3.23
19 8.19 5.93 5.01 4.50 4.17 3.94 3.77 3.63 3.52 3.43 3.30 3.15
20 8.10 5.85 4.94 4.43 4.10 3.87 3.70 3.56 3.46 3.37 3.23 3.09

21 8.02 5.78 4.87 4.37 4.04 3.81 3.64 3.51 3.40 3.31 3.17 3.03
22 7.95 5.72 4.82 4.31 3.99 3.76 3.59 3.45 3.35 3.26 3.12 2.98
23 7.88 5.66 4.76 4.26 3.94 3.71 3.54 3.41 3.30 3.21 3.07 2.93
24 7.82 5.61 4.72 4.22 3.90 3.67 3.50 3.36 3.26 3.17 3.03 2.89
25 7.77 5.57 4.68 4.18 3.86 3.63 3.46 3.32 3.22 3.13 2.99 2.85

30 7.56 5.39 4.51 4.02 3.70 3.47 3.30 3.17 3.07 2.98 2.84 2.70
40 7.31 5.18 4.31 3.83 3.51 3.29 3.12 2.99 2.89 2.80 2.66 2.52
60 7.08 4.98 4.13 3.65 3.34 3.12 2.95 2.82 2.72 2.63 2.50 2.35
120 6.85 4.79 3.95 3.48 3.17 2.96 2.79 2.66 2.56 2.47 2.34 2.19
∞ 6.63 4.61 3.78 3.32 3.02 2.80 2.64 2.51 2.41 2.32 2.18 2.04
Page 328

t-Distribution Table

d. f. t.100 t.050 t.025 t.010 t.005

1 3.078 6.314 12.706 31.821 63.657

2 1.886 2.920 4.303 6.965 9.925
3 1.638 2.353 3.182 4.541 5.841
4 1.533 2.132 2.776 3.747 4.604
5 1.476 2.015 2.571 3.365 4.032

6 1.440 1.943 2.447 3.143 3.707

7 1.415 1.895 2.365 2.998 3.499
8 1.397 1.860 2.306 2.896 3.355
9 1.383 1.833 2.262 2.821 3.250
10 1.372 1.812 2.228 2.764 3.169

11 1.363 1.796 2.201 2.718 3.106

12 1.356 1.782 2.179 2.681 3.055
13 1.350 1.771 2.160 2.650 3.012
14 1.345 1.761 2.145 2.624 2.977
15 1.341 1.753 2.131 2.602 2.947

16 1.337 1.746 2.120 2.583 2.921

17 1.333 1.740 2.110 2.567 2.898
18 1.330 1.734 2.101 2.552 2.878
19 1.328 1.729 2.093 2.539 2.861
20 1.325 1.725 2.086 2.528 2.845

21 1.323 1.721 2.080 2.518 2.831

22 1.321 1.717 2.074 2.508 2.819
23 1.319 1.714 2.069 2.500 2.807
24 1.318 1.711 2.064 2.492 2.797
25 1.316 1.708 2.060 2.485 2.787

26 1.315 1.706 2.056 2.479 2.779

27 1.314 1.703 2.052 2.473 2.771
28 1.313 1.701 2.048 2.467 2.763
29 1.311 1.699 2.045 2.462 2.756
∞ 1.282 1.645 1.960 2.326 2.576
Page 329

Appendix B
Blank Work Forms for Statistical Process Control
Implementation

Statistical Process Control Histogram

Normal Probability Scale
Variables Control Chart & R (Averages & Ranges)
Calculation Worksheet
Variables Control Chart & R (Averages & Sample Standard Deviations)
Calculation Worksheet
Variables Control Chart for Medians & R (Medians & Ranges)
Calculation Worksheet
Variables Control Chart for Individuals X & R (Individuals & Ranges)
Calculation Worksheet
Control Chart for Attribute Data
Calculation Worksheet
Measurement System/Gage Capability Calculation Worksheet

Adapted from Process Control, Capability and Improvement. The IBM

Quality Institute Publication, Southbury, Connecticut, May 1985.
Reprinted with permission.
Page 330
Page 331
Page 332
Page 333
Page 334
Page 335
Page 336
Page 337
Page 338
Page 339
Page 340
Page 341
Page 342
Page 343

Appendix C
Constants and Formulas for Control Charts

and R, and S Charts

Median and Individual Charts

Adapted from ASTM Publication STP-15D, Manual on the Presentation of

Data Control and Analysis, 1976, pp. 134–136. Copyright ASTM, 1976.
Race Street, Philadelphia, Pennsylvania 19103. Reprinted with
permission.
Page 344
Page 345
Page 346

Appendix D
Blank Work Forms for the Implementation of Task Analysis
Technique (TAT) for Cost of Quality Computations

Form A: Task Analysis for Cost of Quality

Form B: Task Analysis for Cost of Quality
Form C: Task Analysis for Cost of Quality
Form D: Task Analysis for Cost of Quality
Form E: Task Analysis for Cost of Quality
Page 347
Page 348
Page 349
Page 350
Page 351
Page 352

Appendix E
Selected Productivity and Quality Centers

Alabama Productivity Center

Dr. David M. Miller
University of Alabama
PO Box 870318
Tuscaloosa, AL 35487-0318
Tel: (205) 348-8956
Fax: (205) 348-9391

American Productivity/Quality Center

Harvey Brelin
123 North Post Oak Lane, Suite 300
Houston, TX 77024-7797
Tel: (713) 681-4020
Fax: (713) 681-3705

Arkansas Productivity Center

Dr. John Imhoff
309 Engineering Building
University of Arkansas
Fayetteville, AR 72701
Tel: (501) 575-3156
Fax: (501) 575-4346

Canadian Quality Management Center

Mr. Stephen Leahey
5101 Buchan Street, 4th Floor
Montreal, Quebec
Canada, H4P 2R9
Tel: (514) 345-2226
Fax: (514) 345-2254

Center for Industrialized Research and Services

Mr. Donald W. Brown
Iowa State University, CIRAS
Box 1427
Cedar Rapids, IA 52406
Tel: (319) 398-2040

Center for Industrial Services

Mr. James R. Ross
25 West Broad, Suite 9
Cookesville, TN 38501
Tel: (615) 528-5518

*International Who’s Who in Quality, Copyright © The Quality Observer

Corporation 1993.

Page 353

Center for the Productive Use of Technology

Mr. David S. Bushnell, HumPRO
66 Canal Center Plaza, Suite 400
Alexandria, VA 22314
Tel: (703) 549-3611
Fax: (703) 549-9025

Centro de Calidad y Productividad, SCP

Lic. Juan Jose Larios Gutierrez
Av. Reforma No. 400-RX35
Merida, Yucatan
CP 97000
Tel: 99/25-24-86
Fax: 99/25-24-86

Centro Chihuahuense Para La Calidad y Productividad

Mr. Gilberto Pinoncely N.
Ave. Cuauhtemoc 1800
Chihuahua, Chih.
Mexico 31250
Tel: 14/16-52-28
Fax: 14/16-52-66

FIM-Productividad
Mr. Ivan Garmendia Suarez,
President
Calle Alameda
Qta. Celmira No. 436
El Rosal, Caracas
Venezuela
Tel: 58/31-38-22
Fax: 58/31-33-73

Florida Center for Public Management

Dr. Larry K. Gross
Florida State University
118 N. Woodward
Tallahassee, FL 32306-4025
Tel: (904) 644-6460
Fax: (904) 644-0152

Fundacion Mexicana para la Calidad Total, AC

Mr. Julio Gutierrez Trujillo, CEO
Loma Bonita No. 24 Lomas Altas
11950 Mexico, DF
Tel: 525/259-25-11
Fax: 525/570-39-89

Georgia Productivity Center

Mr. Ned Ellington
Georgia Institute of Technology
219 O’ Keefe Building
Atlanta, GA 30332
Tel: (404) 894-6101
Fax: (404) 853-9172

Indiana Labor & Management Council, Inc.

Mr. Robert J. Firenze, Sr.
Center for Quality & Productivity
Improvement
2780 Waterfront Parkway E, Suite 212
Indianapolis, IN 46214
Tel: (317) 293-4101
Fax: (317) 297-7037

Industrial Extension Productivity Center

Dr. William A. Smith, Jr.
North Carolina State University
PO Box 7902
Raleigh, NC 27695-7902
Tel: (919) 737-2358
Fax: (919) 737-2463

Institute for Productivity, Inc.

Ms. Milagros Guzman
592 Hostos Avenue
Baldrich, Hato Rey, PR 00918
Tel: (809) 764-5145
Fax: (809) 763-8754

Instituto Centroamericano de Investigacion y Technologia Industrial

Mr. W. Ludwig Ingram, PGCP
Ave. La Reforma 4–47, Zona 10
Guatemala 01010
Guatemala, Central America
Tel: 502/2-31-06-31
Fax: 502/2-31-74-70

International Productivity Service

Mr. Joji Arai
200 Constitution Avenue, NW
Room N-5416
Washington, DC 20210
Tel: (202) 523-8692
Fax: (202) 523-8762

Page 354

ITESM Monterrey, Quality Center

Dr. Augusto Pozo Pino
Sucursal de Correos ‘‘J”
Monterrey, NL CP 64689
Mexico
Tel: (52 83) 58-20-00, ext. 5160
Fax: (52 83) 58-07-71

Manufacturing Productivity Center

Dr. Keith E. McKee
IIT Research Institute
10 West 35th Street
Chicago, IL 60616
Tel: (312) 567-4800
Fax: (312) 567-4577

Maryland Center for Quality and Productivity

Thomas C. Tuttle, PhD
College of Business and Mangement
University of Maryland
4321 Hartwick Road, #308
College Park, MD 20742
Tel: (301) 403-4535
Fax: (301) 403-8152

National Productivity Exchange

Dr. Edward C. Hayes
PO Box 261340
San Diego, CA 92196
Tel: (619) 566-5887
Fax: (619) 278-4564

Nebraska Technical Assistance Center

Mr. Herbert Hoover
University of Nebraska—Lincoln
W191 Nebraska Hall
Lincoln, NE 68588-0535
Tel: (402) 472-5600
Fax: (402) 472-2410

Productivity Communications Center

Mr. Dan Dickinson
102 Braswell Road
ChapelHill, NC 27516
Tel: (919) 968-0047
Fax: (919) 968-0047 (Call First) Productivity Improvement Service,
Canada
Mr. Peter Morse
Srvices to Business Branch
Industry, Science, and Technology
Canada
235 Queen Street
Ottawa, Ontario, K1A OH5
Tel: (613) 954-4969
Fax: (613) 954-5463

Productivity and Quality Research Group

Dr. Gerhard J. Plenert
BYU, Marriott School of
Management
687 TNRB—Box 132
Provo, UT 84602
Tel: (801) 378-7338
Fax: (801) 378-4501

Productivity Research Group

Dr. David J. Sumanth
Department of Industrial
Engineering
University of Miami
Coral Gables, FL 33124
Tel: (305) 284-2344
Fax: (305) 284-4792
Quality Productivity Institute
Dr. Robert Bush
Northwest Missouri State University
Maryville, MO 64468
Tel: (816) 562-1633
Fax: (816) 562-1900

Quality & Productivity

Management Association
Mr. William L. Ginnodo
300 North Martingale Road, Suite 230
Schaumberg, IL 60173
Tel: (708) 619-2909
Fax: (708) 619-3383

Saskatchewan Research Council

Mr. John Spankie
15 Innovation BLVD
Saskatoon, Saskatchewan
S7N 2X8 Canada
Tel: (306) 933-5400
Fax: (306) 933-7446

Page 355

Texas Center for Productivity and Quality of Work Life

Dr. Barry A. Macy
Texas Tech University
College of Business Administration
Box 4320
Lubbock, TX 79409
Tel: (806) 742-1530
Fax: (806) 742-2099

Virgina Productivity Center

Mr. D. Scott Sink, PhD, PE
College of Engineering
Department of Industrial and
Systems Engineering
567 Whittemore Hall
Blacksburg, VA 24061-0018
Tel: (703) 231-4568
Fax: (703) 231-6925

Work in America
Mr. Jerome Rosow
700 White Plains Road
Scarsdale, NY 10583
Tel: (914) 472-9600
Fax: (914) 472-9106

Work in Northeast Ohio Council

Mr. Robert P. Meyer
5755 Granger Road, Suite 501
Independence, OH 44131
Tel: (216) 749-0150, ext. 225
Fax: (216) 749-0983

World Confederation of Productivity Science

Mr. Tor Dahl
2202—5th Street, Suite 1240
White Bear Lake, MN 55110
Tel: (612) 429-3112
Fax: (612) 429-7951
Page 356

Appendix F
Glossary of Terms

Accuracy: deviation of the measured or observed value from the true

value (see also Precision)

Advanced statistical methods: more sophisticated and less widely

applicable techniques of statistical process analysis and control than
included in basic statistical methods; this can include more advanced
control chart techniques, regression analysis, design of experiments, and
advanced problem-solving techniques

Allocation criteria: used for allocating overhead expenses to the various

input and output components

Arithmetic mean: often referred to as the average of the population

Attributes data: qualitative data that can be counted for recording and
analysis; examples include characteristics, such as the presence of a
required label, the installation of all required fasteners, the absence of
errors on an expense report; other examples are characteristics that are
inherently measurable (may be treated as variables data), but for which
the results are recorded in a simple yes/no fashion, such as acceptability
of a shaft diameter when measured on a go/no-go gage, or the presence
of any engineering changes on a drawing; attributes data are usually
gathered in the form of nonconforming units or of nonconformities; they
are analyzed by p, np, c, and u control charts (see also Variables data)

Average: sum of values divided by the number (sample size) of values;

designated by a bar over the symbol for the values being averaged: (X
bar) is the average
Page 357

of the X values within a subgroup; (X double bar) is the average of

subgroup averages; (X tilde bar) is the average of subgroup media; (p
bar) is the average of p values from all the subgroups (see also Mean)

Awareness: personal understanding of the interrelationship of quality and

productivity, directing attention to the requirement for management
commitment and statistical thinking to achieve never-ending improvement

Basic statistical methods: apply the theory of variation through use of

basic problem-solving techniques and statistical process control; include
control chart consttuction and interpretation (for both variables and
attributes data) and capability analysis

Binomial distribution: discrete probability distribution for attributes data

that applies to conforming and nonconforming units and underlies the p
and np charts

Block: part of the experimental material that is likely to be more

homogeneous than the whole

Capability: (can be determined only after the process is in statistical

control); when the process average plus and minus and 3σ spread of the
distribution of individuals ( + 3σ) is contained within the specification
tolerance (variables data), or when at least 99.73% of individuals are
within specification (attributes data), a process is said to be capable;
efforts to improve capability must continue, however, consistent with the
operational philosophy of never-ending improvement in quality and
productivity

Capital: in the context of the present study, the investment in natural

resources, reproducible capital (structures, machinery, equipment, and
inventories), and financial assets, excluding investments in government
debt and in securities of other enterprises

Capital compensation: income accruing to owners of property in the form

of interest, rent, royalties, and profits
Capital consumption: using up stored services and the resulting decline
in value of reproducible durable capital as a result of aging, deterioration,
and obsolescence; not to be confused with capital input, which
represents the use of extant capital goods

Capital, fixed: sum of the value of land, structures, machinery, and

equipment

Capital, working: sum of the value of cash, accounts and notes

receivable, and inventories

Cause-and-effect diagram: simple tool for individual or group problem-

solving that uses a graphic description of the various process elements to
analyze potential sources of process variation; also called fishbone
diagram (after its appearance) or Ishikawa diagram (after its developer)

Page 358

Central line: the line on a control chart that represents the average or
median value of the items being plotted

Characteristic: a distinguishing feature of a process or its output on which

variables or attributes data can be collected

Common cause: a source of variation that affects all the individual values
of the process output being studied; in control chart analysis it appears
as part of the random process variation

Comparative experiments: an experiment whose objective is to compare

the treatments rather than to determine absolute values

Component placement list: a document that cross references each

electronic component with its required location on the printed circuit
board

Comprehensive productivity planning cycle (CPPC): formalized process

for planning productivity in an organization; has four major components:
productivity planning appraisal process (PPAP), strategic productivity
planning process (SPPP), tactical productivity planning process (TPPP),
and operational productivity planning process (OPPP)

Comprehensive quality planning: process of assessing all factors that

may affect product or service quality throughout the specified life cycle

Computer-integrated manufacturing (CIM): fully integrated CAD/CAM

(computer-aided design / computer-aided manufacturing) system that
provides computer assistance from marketing to product shipment

Consecutive: units of output produced in succession; a basis for selecting

subgroup samples

Continuous flow manufacturing: a production technique that organizes

production lines such that a product can flow from raw material stocking
locations to final packaging and shipment in a continuous manner. It
generally requires laying out a production facility along product lines
rather than functionally, and balancing production operations and
schedules to synchronize flow. This type of production normally
minimizes buffer stock between operations and material handling, which
reduces costs

Continuous improvement in quality and productivity: the operational

philosophy that makes best use of the talents within the company to
produce products of increasing quality in an increasingly efficient way
that protects the return on investment

Control chart: a graphic representation of a characteristic of a process,

showing plotted values of some statistic gathered from that characteristic,
a central line, and one or two control limits; minimizes the net economic
loss from type I and type II errors; has two basic uses: as a judgment to
determine if a process has been operating in statistical control, and as an
operation to aid in maintaining statistical control

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Control limit: a line (or lines) on a control chart used as a basis for
judging the significance of the variation from subgroup to subgroup;
variation beyond a control limit is evidence that special causes are
affecting the process; control limits are calculated from process data and
are not to be confused with engineering specifications

Deflation (price): dividing an economic time series expressed in value

terms by an index of prices of the underlying physical units (combined by
appropriate quantity weights) in order to convert the series to “real” terms
or constant prices

Deflator: generally an index of price used to bring the current dollar

output and/or input(s) to base-period terms; a deflator can be less than
1.0, although, because of inflation, it is usually greater than 1.0

Delphi technique: qualitative forecasting technique that utilizes a panel of

experts and a series of questionnaires to develop a forecast

Detection: a past-oriented strategy that attempts to identify unacceptable

output after it has been produced and then separate it from the good
output (see also Prevention)

Distribution: a way of describing the output of a common-cause system of

variation in which individual values are not predictable but in which the
outcomes as a group form a pattern that can be described in terms of its
location, spread, and shape; location is commonly expressed by the
mean or average, or by the median; spread is expressed in terms of the
standard deviation or the range of a sample; shape involves many
characteristics, such as symmetry and peakedness, but these are often
summarized by using the name of a common distribution, such as the
normal, binomial, or Poisson

Effect of a factor: change in response produced by a change in the level

of the factor (applicable only for factors at two levels each)

Experiment: a planned set of operations that leads to a corresponding set

of observations

Experimental unit: one item to which a single treatment is applied in one

replication of the basic experiment

Factor-independent variable: a feature of the experimental conditions that

may be varied from one observation to another, may be qualitative or
quantitative, fixed or random

Forecasting: a tool used in productivity and quality planning process;

various forecasting techniques, such as exponential smoothing and
arithmetic average, are useful in the planning process

Group technology: the organizing and planning of production parts into

batches that have some similarity of geometry and/or processing
sequence

Page 360

Harmonization: the integration of the interests of the stockholders

(owners), the board of directors management, and employees in a
consistent manner both within and outside the physical boundaries of an
organization

Human factors engineering (ergonomics): the multidisciplinary activity of

designing human/equipment interface to match the human capacities
with the physical work environment

Index number: device for measuring proportionate changes or differences

in simple or complex quantities relative to their “base” magnitude; index
numbers of a time series, the most common type, represent magnitudes
in given periods as percentages of their value in a base period

Index-number problem: differences in movement of a quantity (price)

index resulting from the use of different weight bases if there is a
systematic relationship between relative changes in quantities sold and
prices

Individual: a single unit or a single measurement of a characteristic

Interaction: if the effect of one factor is different at different levels of

another factor, the two factors are said to interact or to have interaction

Just-in-time: a production technique that requires that product be

produced (or purchased) only when required, just in time for insertion at
the point of use. It is an example of “pull’’ production rather than “push”
and generally requires a signal (sometimes a card or empty stock
location) to signal an upstream operation to begin production. This
method of manufacturing lowers inventory and stops excessive
production of inventory that is not ready for use or sale

Levels of a factor: the various values of a factor considered in the

experiment are called levels

Location: general concept for the typical values or central tendency of a

distribution
Main effect: the average effect of a factor is called the main effect of the
factor

Mean: the average of values in a group of measurements

Management information system: a computer-based system that is used

by an organization to capture, control and store information relative to the
key processes, products, services and functions of the organization. It is
usually capable of generating management reports regarding costs,
revenues, product and service quality, resource management, personnel
management, key processes and cost drivers.

Median: the middle value in a group of measurements, when arranged

from lowest to highest; if the number of values is even, by convention the
average of the middle two values is used as the median; subgroup
medians form the basis for a simple control chart for process location;
medians are designated by a tilde (~) over the symbol for the individual
values: is the median of a subgroup

Page 361

Morale management: ongoing process of improving factors that affect

employee productivity and quality

Motivation: motivational strength to satisfy a need

Nominal group technique: a technique that allows large or small groups

to participate actively in idea generation and problem resolution through
brainstorming, recording of ideas, prioritization and determining a
strategy for proceeding

Noncomparative experiment: an experiment whose objective is the

determine of the properties or characteristics of a population

Nonconforming units: units that do not conform to a specification or other

inspection standard; sometimes called discrepant or defective units; p
and np control charts are used to analyze systems producing
nonconforming units

Nonconformities: specific occurrences of a condition that does not

conform to specifications or other inspection standards, sometimes called
discrepancies or defects; an individual nonconforming unit can have the
potential for more than one nonconformity (a door may have several
dents and dings; a functional check of a carburetor may reveal any of a
number of potential discrepancies); c and u control charts are used to
analyze systems producing nonconformities

Normal distribution: a continuous, symmetrical, bell-shaped frequency

distribution for variables data that underlies the control charts for
variables; when measurements have a normal distribution, about 68.26%
of all individuals lie within ± 1 standard deviation unit of the mean, about
95.44% lie within ± 2 standard deviation units of the mean, and about
99.73% lie within ± 3 standard deviation units of the mean. These
percentages are the basis for control limits and control chart analysis
(since subgroup averages are normally distributed even if the output as a
whole is not), and for many capability decisions (since the output of many
industrial processes follows the normal distribution)
Operational definition: means of clearly communicating quality
expectations and performance; it consists of (1) a criterion to be applied
to an object or to a group, (2) a test of the object or of the group, (3) a
decision: yes or no—the object or the group did or did not meet the
criterion

Operational productivity planning process (OPPP): concerns itself with

detailed implementation of the plans

Outcome (response)-dependent variable: result of a trial with a given

treatment is called a response

Pareto diagram: a simple tool for problem-solving that involves ranking all
potential problem areas or sources of variation according to their
contribution to cost or to total variation; typically, a few causes account
for most of the cost (or variation), so problem-solving efforts are best
prioritized to concentrate on the “vital few” causes, temporarily ignoring
the “trivial many”

Page 362

Participative management: a style of management in which managers

and employees work together and share joint responsibility for various
organizational functions and tasks, problem resolution, decision making
and process improvement Poisson distribution: discrete probability
distribution for attributes data applies to nonconformities and underlies
the c and u control charts

Precision: a measurement’s precision is related to its repeatability in

terms of the deviation of a group of observations from a mean value; the
terms “accuracy” and ‘‘precision” are often used interchangeably, but they
may be distinguished as accuracy being the measure of the approach to
a true value, and precision a measure of consistency or repeatability
Prevention: a future-oriented strategy that improves quality and
productivity by directing analysis and action toward correcting the
process itself; consistent with a philosophy of never-ending improvement
Problem-solving: process of moving from symptoms to causes (special or
common) to actions that improve performance; among the techniques
that can be used are Pareto charts, cause-and-effect diagrams, and
statistical process control techniques Process: combination of people,
equipment, materials methods, and environment that produce output—a
given product or service; can involve any aspect of a business; a key tool
for managing processes is statistical process control Process average:
location of the distribution of measured values of a particular process
characteristic, usually designated as an overall average

Process control: a state whereby statistical inferences techniques are

used to monitor and control a specified process in order to achieve
improved quality and gains in productivity

Process control system: a feedback mechanism that provides information

about process characteristics and variables, process performance, action
on the process, inputs, transformation process, and action on the output
Process spread: extent to which the distribution of individual values of the
process characteristic vary; often shown as the process average plus or
minus some number of standard deviations (such as + 3σ) Production:
process of transforming resources (inputs) into products (outputs) that
satisfy human wants; sometimes used as a synonym for output, which is
the result of the production process Production and service improvement
techniques (PASIT): ongoing process that involves organized use of
common sense to find easier and better ways of performing work and
streamlining the production and service processes to ensure that goods
and services are offered at minimum overall cost Production worker:
defined by the Bureau of Labor Statistics to include workers (up through
the working foreman level) engaged in fabricating, processing, assem-
Page 363

bling, inspecting, receiving, storing, handling, packing and warehousing,

shipping (but not delivering), maintaining, and repairing, as well as
janitorial work, security services, product development, auxiliary
production for the plant’s own use, record-keeping, and other services
closely associated with these production operations Productivity (capital):
the ratio of total output to capital input

Productivity (computer operating expenses): the ratio of total output to

computer operating expenses input Productivity (data processing
expenses): the ratio of total output to data processing expenses input
Productivity (energy): the ratio of total output to energy input

Productivity (labor): the ratio of total output to labor input

Productivity management triangle (PMT): presents the components of

productivity management, measurement, evaluation and control, planning
and analysis, and improvement and monitoring Productivity (materials):
the ratio of total output to materials input Productivity measurement plan
(PMP): a strategy for productivity improvement that identifies the major
elements of organizational productivity, inputs and outputs, critical
measures for productivity of people and processes, and how the levels of
productivity will be measured, tracked and improved on a continuing
basis.

Productivity (other administrative expenses): the ratio of total output to

other administrative expenses input Productivity (partial): the ratio of total
output to one class of input Productivity planning appraisal process
(PPAP): PPAP provides the basis for understanding the threats,
opportunities, strengths, and weaknesses in the environment in which the
organization operates Productivity and quality challenges: several issues
that deserve significant attention while attempting to improve productivity
and quality Productivity and quality connection: integrated relationship
between productivity and quality Productivity and quality coordinator:
company official charged with the responsibility of coordinating
productivity and quality improvement program Productivity and quality
evaluation and control: evaluating the productivity and quality indicators
of an organization, task, plant, etc.

Productivity and quality indicator: a factor, issue, or indicator that impacts

on productivity and quality
Page 364

Productivity and quality management: integrated process involving both

management and employees with the ultimate goal of managing the
design, development, production, transfer, and use of the various types of
products or services in both the work environment and marketplace;
requires total involvement of everyone in the planning, measurement,
evaluation, control, and improvement of productivity and quality at the
source of production or service center Productivity and quality
management checklist: a comprehensive self-assessment instrument for
identifying areas of weaknesses that deserve productivity and quality
improvement in an organization Productivity and quality management
hierarchy (PQMH): presents the levels and the basis to identify the
productivity and quality issues from a global perspective Productivity and
quality management program: a program design to specifically improve
productivity and quality within an organization Productivity and quality
management triangle (PQMT): a formalized process of productivity and
quality measurement, planning and analysis, evaluation and control,
improvement and monitoring Productivity and quality measurement:
process of measuring the productivity and quality at different levels such
as at the task level, organizational level, or national level Productivity and
quality planning: planning both productivity and quality variables within an
organization, task, plant, etc.

Productivity and quality problems: several factors affecting productivity

level and growth rate and the quality of goods and services Productivity
(robotics operating expenses): the ratio of total output to robotics
operating expenses input Productivity (total): the ratio of total output to all
input factors

Productivity (total-factor): the ratio of total output to the sum of associated

labor and capital factor inputs Profitability: product of a effective and
efficient productivity and quality management program

Profitability analysis: explanation of changes in profits in terms of

changes in total productivity and in “priced recovery,” defined as the ratio
of prices received for outputs to prices paid for inputs Quality: defined as
“fitness for use” by Juran; “conformance to specification” by Crosby;
“fitness for use in terms of the ability to process and produce with less
rework, less scrap, minimal down time and high productivity” by
Edosomwan Quality characteristics: elements of fitness to use that typify
the variety of uses of a given product

Page 365

Quality circle (QC): small voluntary group of coworkers from a plant or

office who meet periodically to formulate and solve problems and thus
raise productivity; in Japan, where this approach has been highly
developed, the circle members are given special training in various
problem-solving techniques Quality cost (appraisal): costs resulting from
the extra effort expanded to assure conformance to quality standards and
performance specifications Quality cost (external): costs generated by
defective products shipped to customers

Quality cost (internal): costs associated with defective products and

discovered prior to product delivery to the customer Quality cost
(prevention): costs resulting from the prevention of nonconformance
items

Quality costs: various categories of costs that associated with identifying,

avoiding, producing, maintaining, and repairing products do not meet
specifications Quality error mapping: a technique for tracing errors to
their source and developing and implementing strategies for correcting
them. It utilizes quantitative data on error types and sources in a series of
matrices to compare number of errors of each type identified with the
source of the error Quality error removal (QER) technique: provides a
framework, principles, and guidelines to a group of employees who
voluntarily work together to select and solve key problem(s), affecting an
organization’s work unit or task, organizational goals are broken down
into small tasks at the operational level, and continuous effort is applied
to improve productivity and quality within each work unit Quality
improvement team: a group of individuals with responsibility for improving
end-to-end quality within a process, product, service or system. Quality
improvement teams are usually made up of 5–9 persons who have been
selected to work on a project or problem because of their knowledge,
ownership and relationship (customer or supplier) to the project
Randomness: condition in which individual values are not predictable,
although they may come from a definable distribution Range: difference
between the highest and lowest values in a subgroup; the expected
range increases both with sample size and with the standard deviation
Repeatability: describes measurement variation obtained when one
person measures the same dimension or characteristic several times with
the same gage or test equipment (sometimes referred to as “equipment
variation’’) Reproducibility: a term popularized in the automotive industry
as representing the variation in measurement averages when more than
one person measures the same dimension or characteristic using the
same measuring instrument Response: the numerical result of a trial
based on a given treatment combination

Page 366

Run: a consecutive number of points consistently increasing or

decreasing, or above or below the central line; can be evidence of the
existence of special causes of variation

Run chart: simple graphic representation of characteristics of a process,

showing plotted values of some statistics gathered from the process
(often individual values) and a central line (often the median of the
values), which can be analyzed for runs

Sample: in process control applications, a synonym for subgroup; this

use is totally different from the purpose of providing an estimate of a
larger group of people or items

Self-directed work team: a team of workers who have responsibility for

directing their own daily activities, making work environment and work
process-related decisions, resolving problems, and measuring and
controlling input and output quality. Usually these teams operate with
minimal day-to-day supervision and take on many responsibilities that
have been traditionally reserved for management

Shape: general concept for the overall pattern formed by a distribution of

values

Sigma (σ): Greek letter used to designate a standard deviation

Special cause: source of variation that is intermittent, unpredictable, and

unstable; sometimes called an assignable cause; signaled by a point
beyond the control limits or a run or other non-random pattern of points
within the control limits

Specification: engineering requirement for judging the acceptability of a

particular characteristic; a specification is never to be confused with a
control limit

Spread: general concept for the extent to which values in a distribution

differ from one another; dispersion
Stability (for control charts): the absence of special causes of variation;
the property of being in statistical control

Stability (for gage studies): variation in the measurement averages when

the measuring instrument values are recorded over a specified time
interval

Stable process: a process that is in statistical control

Standard deviation: a measure of the spread of the process output or the

spread of a sampling statistic from the process (of subgroup averages);
denoted by the Greek letter σ (sigma)

Statistic: a value calculated from or based upon sample data (a subgroup

average or range), used to make inferences about the process that
produced the output from which the sample came

Statistical control: condition describing a process from which all special

causes of variation have been eliminated and only common causes
remain; evidenced on a control chart by the absence of points beyond the
control limits and by the absence of non-random patterns or trends within
the control limits

Page 367

Statistical process control: use of statistical techniques, such as control

charts, to analyze a process or its outputs to take appropriate actions to
achieve and maintain a state of statistical control and to improve the
process capability

Stockless production: a technique used in production operations that

requires that no buffer stock or inventory be carried or held between
workstations. This type of operation requires controlled, high quality
output at each workstation and balanced production lines to ensure that
the production process is continuously flowing. It usually results in
reduced inventory carrying costs, which can be significant

Strategic productivity planning process (SPPP): enables long-range goals

and objectives to be formulated

Subgroup: one or more events or measurements used to analyze the

performance of a process; rational subgroups are usually chosen so that
the variation represented within each subgroup is as small as feasible for
the process (representing the variation from common causes), and so
that any changes in the process performance (special causes) will
appear as differences between subgroups; rational subgroups are
typically made up of consecutive pieces, although random samples are
sometimes used

Tactical productivity planning process (TPPP): concerns itself with the

means of implementing the goals and objectives specified in SPPP

Task-oriented total productivity measurement (TOTP) model: model for

measuring the total productivity of a task and the organization as a whole

Technology-oriented total productivity measurement (TOTPM) model:

model for measuring the total productivity of a technology, project,
product, product group, and the organization as a whole

Total horizontal job enlargement and enrichment (THJEAE): a process

involving both employees and management in expanding job
responsibilities to include a greater variety of activities

Total quality management (TQM): an evolving competitive strategy for

continuous improvement of products, processes, and services to
enhance quality, reduce costs, and improve productivity, and employee
and customer satisfaction. It involves the use of quantitative and
qualitative tools and techniques, considering both technical and human
aspects of organizations, to set goals, analyze work processes, and
improve products and services

Total vertical job enlargement and enrichment (TVJEAE): a process

involving both employees and management in planning, organizing,
performing, and improving the job content

Treatment combination: set of levels of all factors included in a trial in an

experiment is called a treatment or treatment combination

Page 368

Type I error: rejecting an assumption that is true; taking action

appropriate for a special cause when in fact the process has not
changed; over control

Type II error: failing to reject an assumption that is false; not taking

appropriate action when in fact the process is affected by special causes;
under control.

Utility index: defined by Stewart as a “surrogate measure” to produce a

single number

Value analysis (engineering): the analysis of every feature, component or

element of a product, system or process to quantify the amount of value
(in most cases comparatively) each adds to the overall product, system
or process. The analysis is then used to determine and prioritize
resources and re-engineering efforts, to measure the success of re-
engineering efforts, and to make trade-off decisions that are required to
reduce costs.

Variables data: quantitative data, where measurements are used for

analysis; examples include the diameter of a bearing journal in
millimeters, the closing effort of a door in kilograms, the concentration of
electrolyte as a percentage, or the torque of a fastener in Newton-meters;
and R, and s, median and individual control charts are used for
variables data (see also Attributes data)

Variation: inevitable differences among individual outputs of a process;

the sources of variation can be grouped into two major classes: common
causes and special causes

Weight: indicator of relative importance, such as prices, by which

physical units of outputs or of inputs are combined to provide aggregate
measures

Weight base: period from which relative weights are drawn; may or may
not be the same as the “comparison base” from which values are set
equal to 100.0 for index number construction

Worker participation: approach to overcoming resistance to change

through employee involvement in the planning and implementation of the
change

Working condition improvement: a technique that involves a detailed

audit of working conditions at each operation, designing improved
working conditions, and installing and maintaining improvements in the
working conditions

Work measurement: a means of determining an equitable relationship

between the quantity of work performed and the number of labor hours
required for completing the quantity of work

Work simplification: systematic investigation and analysis of

contemplated and present work systems and methods for the purpose of
developing easier quicker, less fatiguing, and more economical ways of
providing high-quality goods and services

Zero defects: a quality philosophy that strives for virtually error-free

production of goods and services
Page 369

Appendix G
Bibliography

Abell, D. F., 1980. Defining the Business. Prentice Hall, Englewood Cliffs,
New Jersey.

Ackoff, R L., 1981. Creating the Corporate Future. John Wiley and Sons,
New York.

Adam, E. E., Jr., J. C. Hershauer, and W. A. Ruch, 1978. Measuring the

Quality Dimension of Service Productivity. National Science Foundation,
U.S. Department of Commerce, Washington, D.C.

Adam, E. E., Jr., J. C. Hershauer, and W. A. Ruch, 1981. Productivity and

Quality: Measurement as a Basis for Improvement. Prentice-Hall,
Englewood Cliffs, New Jersey.

Adam, N. R., and A. Dogramaci, Eds., 1981. Productivity Analysis at

Organizational Level. Kluwer Boston, Hingham, Massachusetts.

Aggarwal, S. C., 1979. A study of productivity measures for improving

benefit-cost ratios of operating organizations. Proceedings 5th
International Conference Production Research, Amsterdam, The
Netherlands, August 12–16, pp. 64–70.

American National Standards Institutes, 1975. Control Chart Method of

Controlling Quality During Production (ASQC Standard B3-1958/ANSI
Z1.3-1958, revised.

American National Standards Institute, 1975. Guide for Quality Control

and Control Chart Method of Analyzing Data (ASQC Standards B1-1958
and B2-1958/ANSIZ1.1-1958 and Z1.2-1958, revised.

American Productivity Center, 1978. Productivity and the industrial

engineer. Region VIII, AIIE Conference, Chicago, October 27, (seminar
notes).
Page 370

American Society for Quality Control, 1976. QC Circles: Applications,

Tools, and Theory, 161 West Wisconsin Avenue 53203.

American Society for Testing and Materials, 1976. Manual on

Presentation of Data and Control Chart Analysis (STP-15D).

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Page 381

Index

Analysis of variance (ANOVA technique), 186–188

basic matrix for, 188

steps in performing, 187

Arithmetic-average forecasting technique (AAFT), 210–211

Arithmetic mean, 174–176

Attribute control charts, 146–147, 149

measurement methods for, 148

Behavioral quality, 7

Benefits of productivity and quality management, 10–11

Challenges to productivity and quality management, 31–38

Checklist for productivity and quality management, 297–311

Coefficient of variation, 178

Commercial quality, 7

Comprehensive productivity and quality management (CPQM) model, 38,

39

Comprehensive productivity measurement (CPM) model, 135

Comprehensive productivity planning cycle (CPPC), 197–198

implementation steps for, 198–207

common problems encountered and ways to counter them, 207–209

establishment of program, 198–199

improvement action implementation, 206

measurement technique implementation, 206

operational productivity planning process, 204–205

Page 382

[Comprehensive productivity planning cycle (CPPC)]

productivity planning appraisal process, 200–201

project maintenance, 206

setting implementation priorities, 206, 207

strategic productivity planning process, 201–202, 203

tactical productivity planning process, 202–203

Computer-aided design/computer-aided manufacturing (CAD/ CAM),

245, 280, 281

Computer-integrated manufacturing (CIM), 245

Conditional probability, 178–179

Confidence interval, 180

Confidence limits, 180

Constants and formulas for control charts (Appendix C), 343–345

Consumer satisfaction, 313–316

customer relations and management, 315–316

product and service delivery, 315

product and service design, 315

traditional vs. customer-driven organization, 313, 314

Continuous flow manufacturing (CPM), 245

Continuous improvement of productivity. See Total quality management

(TQM) Continuous improvement teams, guidelines for, 57–59

goal setting, 57–58

problem analysis and resolution, 58–59

roles and responsibilities, 56–57

team recognition and reward, 59

teamwork and communication channels, 59

Control charts, 146–148, 149

attribute control charts, 146–147, 148, 149

constants and formulas for, 343–345

variable control charts, 147, 149

Corporations, cutback in major corporations between Jan. 1985 and Aug.

1986, 28, 29

Crosby’s philosophy of quality management, 17–21

Crosby’s quality management maturity grid, 18, 19

Customer-driven improvement approach (quality improvement strategy),

14

Cyclic effect of low-productivity growth, 1, 2

Data analysis, statistical tools for, 170–178

arithmetic mean, 174–176

frequency distribution, 171–174

median, 176

midrange, 177

mode, 177

proportion, 177

range, 177

variance and standard deviation, 177–178

Decline in productivity, causes of, 12–13

Degrees of freedom (DF), 180

Deming’s philosophy of quality management, 22–25

Design impact, 281–282

Page 383

Education and training needs for TQM, 54–55

Effective management system, basic requirements for, 15–16

Eight-step productivity management program planning process, 193

Employee and management morale management program (EMMMP),

279, 280

Employee involvement-based approach (quality improvement strategy),

14, 248

Employee(s):

-based technique for improving productivity and quality, 248

cutbacks in major corporations between Jan. 1985 and Aug. 1986, 28, 29

empowerment of, 272–276

major factors affecting productivity and job performance, 245–247

motivation of, 272, 273, 274

in high-technology production environment, 276–278

Exponential smoothing forecasting technique (ESFT), 211–212

Facilitator (QC team role), 239

Fact, quality in, 8

‘‘Fitness for use,” quality as, 5–6

Forecasting techniques for productivity and quality planning, 209–213

arithmetic-average forecasting technique (AAFT), 210–211

choosing the best technique, 212–213

exponential smoothing forecasting technique (ESFT), 211–212

factors affecting choice of technique, 213

last value forecasting technique (LVFG), 209–210

moving-average forecasting technique (MAFT), 211

steps in forecasting process, 213

See also Technological forecasting Four year TQM implementation plan,

62, 63

Frequency distribution, 171–174

General Accounting Office (GAO) study of TQM barriers and benefits, 42,
43–47

Group technology (GT), 34, 35, 280, 281

statistical process control (SPC) in case study, 166–169, 170

Guru approach (quality improvement strategy), 14

Hypothesis testing, 180–185

formulas for, 185

possible results in, 183

steps in, 184



Improvement management, 11–12, 270–272

model for, 271

Improvement strategies and techniques, 245–265

factors affecting employee job performance and productivity, 245–247

production and service improvement techniques (PASIT), 245, 249–251

Page 384

[Improvement strategies and techniques, production and service

improvement techniques (PASIT)]

basic tools for implementation, 264

benefits of, 249–250

defined, 249

major principles behind, 250–251

PASIT implementation methodology, 251–263

current operating impact assessment, 260

educating everyone on concepts and principles, 254, 255

establishing teams and leadership council, 253

implementation of improvement methods, 263

operations analysis, focus problem selection, and process simulation,

258–259, 260, 261, 262

operations and service improvement, 261–262

testing selected improvement strategies, 263

understanding current service and production parameters, 254–258

productivity and quality improvement techniques, 247–249

Japan, relative product quality comparison between the West and, 29, 30

Japanese total quality approach (quality improvement strategy), 14

Job simplification program, 267–269

Juran’s philosophy of quality management, 21–22

Just-in-time (JIT) technique, 245

Labor productivity, average annual growth in U.S. private business sector

of (1889–1980), 28

Last value forecasting technique (LVFT), 209–210

Low productivity growth, cyclic effect of, 1, 2

Management development program, 269–272

model for “improvement management,” 271

Managing the productivity and quality improvement program, 285–312

basic requirements for effective management, 15–16

checklist for, 297–311

customer relations and, 315–316

formal definition of productivity and quality management, 9

key elements for a successful program, 285–290

organization for, 291, 292, 293

overcoming problems, 27–31, 292–297

overall strategy for, 296–297

Material-based techniques for improving productivity and quality, 249

Mean, arithmetic, 174–176

Mean absolute deviation (MAD) method for selecting best forecasting

technique, 212–213

Measurement of productivity, 79–137

Page 385

[Measurement of productivity]

benefits of productivity measurement in companies and organizations,

79–80

comprehensive productivity measurement model, 135

difficulties in measuring productivity, 80

relationship between productivity and planning measurement, 209

task-oriented total productivity measurement (TOTP) model 86–104

case studies using TOTP model, 105–125

derivation of productivity values and index notations, 88–91

implementation methodology, 91–104

input and output components of, 88

key definitions associated with, 87

technology-oriented total productivity measurement (TOTPM) system,

125–135

allocation criteria for overhead expenses, 131

case study: TOTPM in two technology-producing companies, 132–135

implementation to methodology, 131–132

notation for derivation of productivity values and indexes, 129–131

types of productivity measures, 81–86

partial productivity, 81, 82, 83–84

total-factor productivity, 85

total productivity measure, 85–86

utility index, 82

Midrange (Mr), 177

Mode (Md), 177

Morale:

factors to improve, 282

management program for, 279, 280

Motivational techniques, 32–33

Motivation of employees, 272, 273, 274

in high-technology production environment, 276–278

total horizontal job enlargement and enrichment, 277, 278

total vertical job enlargement and enrichment, 276–277

Moving-average forecasting technique (MAFT), 211

Net present value (NPV), 33

Nominal group technique (NGT) (quality problem-solving technique),

232–234

Operational productivity planning process, 204–205

budgeting, 204–205
controlling, 205

programming, 204

scheduling, 204

Partial productivity, 3, 81, 82, 83–84

Perception, quality in, 8

Point estimate, 180

Poor quality, impact of, 1, 3

Probability measure, 178–180

Page 386

Problem resolution model (quality problem solving technique), 230–231

Process action teams (PATs), 230

Process analysis technique (PAT), 245

Process control, 139

Process control system, 140

Product-based techniques for improving productivity and quality, 248

Production and service improvement technique (PASIT), 245, 249–251

basic tools for implementation, 264

benefits for, 249–250

defined, 249

implementation methodology, 251–263

current operations impact assessment, 260

educating everyone on concepts and principles, 254, 255

establishing teams and leadership council, 253

implementation of improvement methods, 263

operations analysis, focus problem selection, and process simulation,

258–259, 260, 261, 262

operations and service improvement, 261–262

testing selected improvement strategy, 263

understanding current service and production parameters, 254–258

major principles behind, 250–251

Productivity:

definition of, 2–3, 4–5

measurement of, 4–5

Productivity and quality assessment matrix (PAQAM), 66–68

Productivity and quality centers (in U.S. and abroad), 352–356

Productivity and quality management hierarchy (PQMH), 16–17

total teamwork involvement in, 37

Productivity and quality management triangle (PQMT), 9, 10

comprehensive productivity planning as component in, 196, 197

Productivity and quality planning, 191–228

basic forecasting techniques for, 209–213

arithmetic-average forecasting technique (AAFT), 210–211

choosing the best technique, 212–213

exponential smoothing forecasting technique (ESFT), 211–212

factors affecting choice of technique, 213

last value forecasting technique (LVFT), 209–210

moving-average forecasting technique (MAFT), 211

steps in forecasting process, 213

comprehensive productivity planning, 191–194

allocation of tasks, 216–217

definition and benefits of, 194–195

as component in productivity management triangle (PMT), 196, 197

Page 387

[Productivity and quality planning, comprehensive productivity planning]

features of, 195–196

stages of, 197–198

implementation steps for comprehensive productivity planning cycle

(CPPC), 198–207

common problems encountered and ways to counter them, 207–209

establishment of program, 198–199

improvement action implementation, 206

measurement technique implementation, 206

operational productivity planning process, 204–205

productivity planning appraisal process, 200–201

project maintenance, 206

setting implementation priorities, 206, 207

strategic productivity planning process, 201–202, 203

tactical productivity planning process, 202–203

quality planning, 214–217

relationship between productivity planning and measurement, 209

technological forecasting, 218–226

definition, 218

methodology in high-technology industry, 219–226

operational definition, 219

Productivity–quality connection, 65–78

balancing productivity and quality goals, 66–68

case studies illustrating

banking operations, 75

printed circuit board manufacturing, 68–73

restaurant-customer relations, 74–75

shoe manufacturing, 73–74

the connection, 65–66

cost of inspection per sample, 77–78

understanding the basic cost of quality, 76–77

Product quality, relative comparison between Japan and the West, 29, 30

Proportion (P), 177

Quality:

cost of, 76–77

task analysis technique (TAT) for computations, 346–351

definition of, 3–9

perspectives on, 17–25

Crosby’s philosophy, 17–21

Deming’s philosophy, 22–25

Juran’s philosophy, 21–22

relative product quality comparison between Japan and the West, 29, 30
strategies for implementing quality programs, 13–15

Quality award criteria approach (quality improvement strategy), 13

Quality circle (QC) concept, 229–230

definition of roles and responsibilities of QC team, 239

Quality error mapping (QEM), 231, 232

Page 388

Quality error removal (QER) technique, 234

benefits of, 234

implementation of, 232, 239

assembly task (case study), 239–242

bank clerical task (case study), 242–243

key principles and guidelines, 235–239

problems encountered during implementation, 243

task boundaries of, 235

Quality improvement teams (QITs), 230

Quality planning. See Productivity and quality planning Quality problem

solving techniques. See Resolving quality problems

Range (R), 177

Rate of return on investment (ROI), 33

Resolving quality problems, 229–244

implementation of quality error removal (QER) technique, 232, 239

assembly task (case study), 239–242

bank clerical task (case study), 242–243

nominal group technique (NGT), 232–234

from quality circles to process improvement teams, 229–230

quality error mapping (QEM), 231, 232

quality error removal (QER) technique, 234

benefits, 234

implementation, 232, 239

key principles and guidelines, 235–239

problems encountered during implementation, 243

task boundaries, 235

problem resolution model, 230–231

Robotics, 280, 281

Sensory quality, 7

Standard deviation, 177–178

Statistical process control (SPC), 139–189

analysis of variance (ANOVA) technique, 186–188

basic concepts for designing experiments in business process

environment, 160– 166

requirements for successful experiments, 163

steps in design process experiment, 163–166

three principles of experimental design, 161–162

basic review of probability, 178–180

basic statistical tools for data analysis, 170–178

arithmetic mean, 174–176

frequency distribution, 171–174

median, 176

midrange, 177

mode, 177

proportion, 177

range, 177

variance and standard deviation, 177–178

Page 389

[Statistical process control (SPC)]

benefits of process control management systems, 142

confidence interval, limits level, and point estimate, 180, 181–182

group technology environment use of (case study), 166–169, 170

hypothesis testing, 180–185

implementation steps for, 143–160

classification of production or service process into sector cells, 143, 144,

145

data collection, synthesis and computations, 149, 151

data collection design and database for SPC information, 149

development of measurement method for variables, 146–148, 149

familiarization sessions, 143

improve process capability through analysis of problem root causes, 159

input and output analysis for each sector cell, 144–146, 147

interpretation for process control and capability, 150–159

ongoing process control monitoring, 160

personal training and testing of data collection instruments, 149

key requirements for process management, 141

process control definition, 139

process control system definition, 140

work forms for SPC implementation (Appendix B), 329–342

Statistical tables (Appendix A), 322–328

Statistical tools for data analysis, 170–178

arithmetic mean, 174–176

frequency distribution, 171–174

median, 176

midrange, 177

mode, 177

proportion, 177

range, 177

variance and standard deviation, 177–178

Strategic productivity planning process, 201–202, 203

Structural quality, 7

Tactical productivity planning process, 202–203

TAKT time, 264

Task analysis technique (TAT) for cost of quality computations (Appendix

D), 346–351

Task-based techniques for improving productivity and quality, 248–249

Task-oriented total productivity-measurement (TOTP) model, 86–104

case studies using, 105–125

comparison of manual and computer-aided methods of assembling
printed circuit boards (PCBs), 105–111

computer-aided manufacturing impact on total productivity in PCB

assembly, 118–125
Page 390

[Task-oriented total productivity-measurement (TOTP) model, case

studies using]

robotic device impact on total productivity in PCB assembly, 112–117

derivation of productivity values andindex notations, 88–91

implementation methodology for, 91–104

base period and deflator selection, 95–97

data collection, synthesis, and computations, 102–103

data collection design, 101

development of allocation criteria for overhead expenses, 95

familiarization sessions, 91–92

personnel training and testing of data collection instruments, 101–102

task significance, input–output analysis, 92–94

trend analysis and interpretation of findings, 103

input and output components of, 88

key definitions associated with, 87

for measurements of QER techniques, 241–242

Teacher (QC team role), 239

Team correction master (QC team role), 239

Team leader (QC team role), 239

Team member (QC team role), 239

Team presentations (QC team activity), 239

Technological forecasting, 218–226

definition of, 218

keys to successful use of forecasting in high-tech industry, 225–226

methodology in high-tech industry, 219–226

evaluation of competitor strategy, customer requirements, and state of

the art, 221–222

expert evaluation of technological forecasts, 223–224

forecast timing, 222

important aspects of forecasting, 221

means, approach, and techniques of measurement, 222

monitoring the forecast, 224

problems and pitfalls in forecasting in high-tech industry, 224–225

some forecasting techniques, 222–223

technological forecasting group (TFG) activities, 221

where technological forecasting begins, 219

operational definition by levels in high-tech industry, 219

Technology:

assessing and measuring impact on productivity and quality, 33

average life cycle trend of, 31–32

-based techniques for improving productivity and quality, 247–248

as factor in productivity and quality improvement, 279–281

management impact of GT implications on, 34, 35